IMPORTANT INFORMATION

THIS UPDATE IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR

FORM PART OF AN OFFER, SOLICITATION OR INVITATION TO BUY OR SUBSCRIBE FOR ANY

SECURITIES OF PT SOECHI LINES TBK. (“WE”, “US”, “OUR” OR “OUR COMPANY” “SOECHI

LINES”) IN THE REPUBLIC OF INDONESIA, THE UNITED STATES OR ANY OTHER JURISDICTION.

WE HAVE NOT REGISTERED, NOR DO WE INTEND TO REGISTER, OUR SECURITIES UNDER THE

U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND OUR SECURITIES

MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN

EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION

REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH OTHER APPLICABLE

SECURITIES LAWS. ANY PUBLIC OFFERING IN THE UNITED STATES WILL BE MADE ONLY BY

MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM OUR COMPANY AND THAT WILL

CONTAIN DETAILED INFORMATION ABOUT OUR COMPANY AND MANAGEMENT, AS WELL AS

FINANCIAL STATEMENTS. WE DO NOT INTEND TO MAKE ANY PUBLIC OFFERING OF OUR

SECURITIES IN THE REPUBLIC OF INDONESIA, THE UNITED STATES OR ANY OTHER

JURISDICTION.

CERTAIN STATEMENTS IN THIS DOCUMENT MAY CONSTITUTE “FORWARD-LOOKING

STATEMENTS”, INCLUDING STATEMENTS PRECEDED BY, OR THAT INCLUDE THE WORDS

“WILL”, “INTENDS”, “PROJECTS”, “ESTIMATES” OR SIMILAR EXPRESSIONS. THE COMPANY

DOES NOT MAKE ANY REPRESENTATION OR WARRANTY THAT THE FORWARD-LOOKING

STATEMENTS CONTAINED IN THIS DOCUMENT WILL BE ACHIEVED, AND SUCH FORWARD-

LOOKING STATEMENTS REPRESENT ONLY ONE OF MANY SCENARIOS AND SHOULD NOT BE

VIEWED AS THE MOST LIKELY OR STANDARD SCENARIO.

UPDATE REPORT

PT SOECHI LINES TBK.

This is a voluntary announcement made by PT Soechi Lines Tbk. (“we”, “us”, “our” or “our Company”

“Soechi Lines”) to keep shareholders of our Company informed of recent developments.

June 9, 2015

Overview

We are the largest independent tanker owner and operator in Indonesia in terms of DWT capacity as of

March 31, 2015, according to Drewry, providing crude oil, petroleum products and LPG shipping services and

shipyard services principally to companies operating in the domestic oil and gas and chemical sectors. As of

March 31, 2015, we owned and operated a total of 35 vessels with an aggregate capacity of 1.3 million DWT, of

which 34 were Indonesian-flagged tankers, including 18 oil tankers, of which two are the only Indonesian-

flagged VLCCs, 12 chemical tankers, three gas tankers and two FSO tankers. We also operate a shipyard the

first phase of which comprises a total land area we estimate is approximately 50 hectares and has a coast line of

1.3 kilometers, and which commenced providing shipbuilding services in 2012. We also intend to offer ship

repair and maintenance services to third parties and to our own vessels after the completion of our floating dry

dock, which is currently under construction.

We operate two principal lines of business: shipping services and shipyard services. Our shipping

business is divided into two main segments based on the contract arrangements under which our vessels are

chartered to customers, namely time charters and spot charters. We currently conduct shipbuilding operations at

our shipyard and, after the construction of our planned floating dry dock is complete, we expect our shipyard to

be capable of receiving orders for maintenance and repair and oil and gas fabrication.

We undertake the commercial and operational management of our charters and fleet, including

commercial strategy, commercial and financial management, acquisition and disposal of vessels, chartering and

the development of new business opportunities. We have entered into agreements with our affiliates, PT Equator

Maritime and PT Vektor Maritim, to provide technical management services for our vessels, and in practice

such services include managing compliance with regulatory and classification standards in respect of our vessels

and the selection and employment of marine crew that operate our vessels. We supervise the performance of the

services provided by our technical managers.

The following table sets forth our net revenue breakdown over our two principal lines of business for the

periods indicated and as a percentage of total net revenue for our business:

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited)

(US$ except percentages)

Net Revenues Shipping

Charter (1) .................... 52,783,473 73.9% 61,696,073 58.0% 65,292,539 51.2% 17,931,686 68.4% 20,110,518 59.2%

Spot ............................. 18,172,124 25.5% 40,801,995 38.3% 42,095,486 33.0% 5,959,189 22.7% 7,526,173 22.2%

Shipyard ................................

435,876 0.6% 3,906,506 3.7%

20,089,361

(1) 15.8% 2,321,333 8.9% 6,317,425 (1) 18.6%

Total ...................................... 71,391,473 100.0% 106,404,574 100.0% 127,477,386 100.0% 26,212,208 100.0% 33,954,116 100.0%

Note: (1) Includes revenue from related parties.

Our business benefits from Indonesian cabotage laws that mandate the use of Indonesian-flagged vessels

for domestic sea freight transportation, particularly to support the national oil and gas downstream industry in

the seaborne distribution of crude oil, petroleum products and LPG around the more than 13,000 islands that

comprise the Indonesian archipelago. As of March 31, 2015, our 34 Indonesian-flagged tankers had a total

capacity of 1.3 million DWT and our two VLCCs currently transport crude oil from Middle East producers to

refineries for processing.

Our largest customer, PT Pertamina (Persero) (“Pertamina”), the state-owned oil company operating nine

refineries around Indonesia, has been a customer of our predecessor companies since we commenced operations

in 1981. Our vessels chartered to Pertamina are principally engaged in time charters and, for the years ended

December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015, respectively, shipping

services provided to Pertamina accounted for 68.2%, 46.3%, 52.4% and 53.2% of our net revenues. We also

provide shipping services to ConocoPhillips (Grissik) Ltd. (“ConocoPhillips”), an international major oil

company operating in Indonesia, and PT Perusahaan Listrik Negara (Persero) (“PLN”), the state-owned

electricity company.

As demand for shipping services provided by domestic operators in Indonesia has increased, we have

sought to increase the number of vessels and the total capacity of our fleet through the acquisition of well-

constructed and well-maintained pre-owned vessels, principally from the European market, which we then re-

flag to become Indonesian-flagged vessels. Our total vessel capacity has increased from 568,184 DWT in 2010

to 1.3 million DWT in 2014, representing a CAGR of 23.8%. Pertamina, our major customer, determines its

charter rates based on, among other things, market rates, previous contracts, the investment required if it were to

use its own fleet and its internal budget. Our time charter rates with Pertamina fluctuate less frequently than time

charter rates in the international market. We believe that Pertamina’s demand for reliable seaborne

transportation to distribute crude oil, petroleum products and LPG around the Indonesian archipelago allows us

to realize steady rates of return on our investment in the acquisition and operation of our vessels and allows us

to utilize these vessels for extended periods of time until the cost of continued docking and maintenance exceeds

our expected returns on continuing time charter.

Our vessel deployment strategy is designed to provide stable cash flow through the use of long-term time

charters for a significant portion of our fleet, in terms of DWT capacity, while maintaining a diversified fleet to

serve sectors of the oil and gas and chemical industry that typically use spot charters. As of April 30, 2015, our

remaining contracted revenues for time charters amounted to US$236.1 million, of which US$92.2 million

relates to revenues from optional extension periods, and our time charter contracts had a weighted average

remaining life of 5.6 years weighted by contract value, including any optional extension periods. For the years

ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015, our net revenues from

shipping services were US$71.0 million, US$102.5 million, US$107.4 million and US$27.6 million, accounting

for 99.4%, 96.3%, 84.2% and 81.4% of our total net revenues, respectively.

In 2012, we commenced new shipbuilding operations at our shipyard located in a Free Trade Zone in

Karimun, Indonesia in the Malacca Straits, an international shipping route, and nearby Singapore, which has a

developed maritime industry. Our shipyard has a coastal depth of 12.0 meters and provides shipbuilding services

for vessels of various carrying capacities. We currently have an orderbook of five new ships under construction,

with completion and deliveries scheduled to occur between late 2015 and 2017. We also have a 50,000 DWT

floating dry dock scheduled to complete construction and enter operation in the fourth quarter of 2015, from

which we expect to provide ship repair and maintenance services for our fleet and other vessels. We believe that

the Free Trade Zone provides our shipyard with advantages on the import of materials and spare parts, including

tax-free status and expedited customs clearance, which will allow us to compete effectively on cost and timing

of shipbuilding, maintenance and repair services. For the years ended December 31, 2012, 2013 and 2014, and

the three months ended March 31, 2015, our net revenues from shipyard services were US$435,876, US$3.9

million, US$20.1 million and US$6.3 million, accounting for 0.6%, 3.7%, 15.8% and 18.6% of our total net

revenues, respectively.

Our net revenue has grown from US$71.4 million to US$127.5 million between the years ended

December 31, 2012 and 2014, representing a CAGR of 33.6%, and for the three months ended March 31, 2015

was US$34.0 million. Our EBITDA has grown from US$32.5 million to US$60.3 million between the years

ended December 31, 2012 and 2014, representing a CAGR of 36.2%, and for the three months ended

March 31, 2015 was US$15.3 million.

Competitive Strengths

We believe that, as the largest independent tanker owner and operator in Indonesia, we have the following

competitive strengths:

Leadership and established track record in the Indonesian crude oil, petroleum products and LPG shipping

industry

We are the largest independent tanker owner and operator in Indonesia in terms of DWT capacity, as of

March 31, 2015, according to Drewry. We have a long operating history and established track record in growing

our fleet and revenue. Since the inception of our business operations in 1981, we have grown the size of our

fleet and, as of March 31, 2015, we owned and operated a total of 35 vessels with a total capacity of

1.3 million DWT, including 18 oil tankers, of which 2 are VLCCs, 12 chemical tankers, 3 gas tankers and 2

FSO tankers. Two of our gas tanker vessels were acquired in March 2015 and are engaged in time charters with

Pertamina. In addition, oil and gas consumption in Indonesia has grown over the recent years as has the demand

for maritime shipping services in this sector.

We believe the size of our fleet, together with our mix of vessels, comprising oil tankers, chemical

tankers, gas tankers and FSO tankers, allows us to provide comprehensive shipping solutions to our customers

engaged in various segments of the oil and gas and chemical production and supply chain. The size of our fleet

also enables us to maintain a highly competitive cost base and enjoy economies of scale in respect of insurance,

employees, repair and maintenance, and other cost items. We place marine insurance on a collective basis and,

as a consequence of both the size and operational history of our fleets, are able to secure insurance cover at

competitive rates with reputable insurers. We believe our technical managers provide us with qualified marine

crew that operate our vessels and to whom we and our technical managers provide periodic training and retain

on a repeated basis, which enables us to keep our employment costs at a competitive level. Our ability to obtain

funding to acquire vessels allows us to respond to customer demands and win tenders for shipping contracts. We

actively manage the deployment of our fleet between time charters and spot charters, and our fleet size and

vessel mix affords us both the opportunity to capitalize on high “spot” market rates and the ability to respond to

changing demand for different vessel types that result from fluctuations in demand for various chemical

products, while achieving high utilization rates and stable cash flow. For the years ended December 31, 2012,

2013 and 2014, and the three months ended March 31, 2015, our fleet-wide utilization rates were 95.9%, 98.1%,

88.1% and 89.2%, respectively.

Recurring revenue and cash flow visibility driven by contracted time charters

As of March 31, 2015, 19 of our vessels, comprising 87.2% of our aggregate DWT capacity, were

chartered to customers under time charters, with initial charter periods ranging from three months to ten years

with the option to extend for additional periods. Our time charters provide us with highly-visible and stable cash

flows to fund our operations and debt service. The majority of our time charter contracts are with creditworthy

major oil and gas and chemical companies, including Pertamina and ConocoPhillips. As of April 30, 2015, our

remaining contracted revenues amounted to US$236.1 million, of which US$92.2 million relates to revenues

from optional extension periods, and the weighted average remaining life of our time charters was 5.6 years

weighted by contract value, including any optional extension periods.

Our time and spot charter contracts are based on standard industry forms with customary terms and are

denominated either in U.S. dollars or the Rupiah-equivalent of U.S. dollars. In accordance with industry

practice, we do not pay for voyage expenses, such as bunker fuel costs and port charges, on our time charters, as

the customer pays for voyage expenses directly, and we pay voyage expenses for our spot charters. Our

operating expenses for time charters are mainly limited to ship maintenance and repair. Our payments for the

acquisition of vessels to expand our fleet, and for ongoing operation and maintenance of our fleet, are

principally denominated in U.S. dollars. As a result, the currency which primarily influences our revenues and

expenses, and the currency of the primary economic environment in which we operate — our functional

currency — is U.S. dollars. Since we expand our fleet through the acquisition of pre-owned vessels, we are not

committed to fund progress payments on new-build vessels. We conduct comprehensive vessel inspections and

reviews of the vessels’ classification certification records to ensure the vessels we acquire are well-constructed

and maintained and meet our customers’ requirements. We believe we enjoy predictable margins on our vessels

because a high percentage of our fleet in terms of DWT capacity is engaged in time charter contracts, and we

use well-constructed and maintained pre-owned vessels, which limits our operating expenses for repair and

maintenance.

For the years ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015, our

EBITDA margin was 45.6%, 41.7%, 47.3% and 45.0%, respectively. We also believe that Pertamina’s demand

for reliable seaborne transportation to distribute gasoline, diesel and jet fuel around the Indonesian archipelago

allows us to realize steady rates of return on our investment in the acquisition and operation of our vessels. We

have experienced a stable rate of option extensions and renewals of our time charter contracts as, in our

experience, our customers prefer to continue use of incumbent vessels rather than locate and contract a time

charter with a new vessel.

Established reputation and long-standing relationships with Pertamina and other large customers

Since the inception of our business in 1981, we have established a strong reputation in the oil and gas and

chemical shipping industry and believe that we are widely known among participants in the industry for our

good quality service and high customer satisfaction. Our efforts to ensure that we provide our customers with

high quality service have earned us various quality certifications, including the Certificate of International

Safety Management from International Maritime Organization, the Tanker Management Self Assessment

Certificate from the Oil Companies International Marine Forum and ISO 9001:2008 and ISO 14000 for quality

control management for shipping companies. These certifications, as well as the ship classifications awarded by

international and domestic ship classification bureaus, have allowed us to participate in the ship tender processes

for major domestic and international oil and gas companies. Our technical managers provide us with a qualified

marine crew for whom we and our technical manager provide periodic training. We believe that our reputation

for providing dependable, safe and efficient shipping services has allowed us to develop and maintain

relationships with major oil and gas companies including Pertamina, ConocoPhillips and Camar Resources

Canada Inc. (“Camar Resources”). We have worked closely with Pertamina, the state-owned oil company

operating nine refineries around Indonesia and which accounts for a substantial amount of oil and chemical

products produced and shipped within Indonesia, for 35 years and is currently the largest provider of oil and gas

and chemical shipping services to Pertamina. We believe that our long-standing relationships with our

customers have allowed us to better understand and meet our customers’ needs and enabled us to maintain a

competitive advantage over other domestic shipping companies.

Rising energy demand and high barriers of entry resulting in favorable industry dynamics

Demand for oil and gas and other chemical products has been growing in Indonesia over recent years. As

Indonesia is an archipelago comprised of more than 13,000 islands, the bulk of such products are transported to

various points of consumption by sea. A consistent growth in the past decade in Indonesia’s economy has been

followed by commensurate growth in Indonesia’s energy consumption. According to Drewry, Indonesia’s

energy consumption has grown at a CAGR of 4.2% in the last five years growing from 877 million barrels of oil

equivalent in 2007 to 1,079 million barrels of oil equivalent in 2012.

The Government’s current plans to implement a sea lane transportation system (the “Sea Toll Program”)

where major domestic sea lanes are lined with well-developed ports so as to provide for, among other things,

more efficient cargo loading and unloading services for vessels, is expected to further boost seaborne

transportation. The Indonesian tax regime is also favorable to our shipping business as foreign companies are

subject to withholding tax of up to 20% on charter fees, while Indonesian companies are only subject to a 1.2%

final tax, allowing us to gain a competitive advantage.

As a result of the implementation of the cabotage principles into Indonesian shipping laws, which was

part of the Government’s efforts to support domestic shipping companies, and the limitation on foreign

investment in Indonesian shipping companies, competition from foreign shipping companies is limited. With the

implementation of cabotage principles into Indonesian shipping laws, there has been an increase in the number

of Indonesian-flagged vessels and a decrease in foreign-flagged vessels operating in Indonesian waters.

According to Drewry, between 2006 and 2013, the number of Indonesian-flagged vessels increased from 6,428

to 13,120 at a CAGR of 10.7% and the aggregate DWT capacity of Indonesian-flagged vessels increased from

2.9 million DWT to 8.2 million DWT at a CAGR of 16.0%. The size of our fleet has grown steadily in the years

following the implementation of Indonesian cabotage laws as we benefited from the aforementioned favorable

industry dynamics and our position as one of the few domestic shipping companies with the Indonesian-flagged

DWT capacity to meet the demands of Pertamina and our other customers in the Indonesian oil and gas and

chemical industry for reliable seaborne transportation to support the production and distribution of gasoline,

diesel and jet fuel around the Indonesian archipelago to meet the rising energy demand in Indonesia.

We believe we are well positioned to capture additional growth opportunities for our business as, under

cabotage principles, domestic companies are required to use Indonesian-flagged vessels for domestic routes. The

Indonesian tax regime is also favorable for international routes as foreign companies are subject to withholding tax

up to 20% on charter fees, while Indonesian companies are only subject to 1.2% final tax. Prospective participants

in our industry also face barriers of entry, including high capital expenditure involved with acquiring Indonesian

flagged vessels and the relatively low availability of skilled and experienced Indonesian seafarers, whom shipping

companies are legally required to use to operate Indonesian flagged vessels. In addition, a significant proportion of

vessel charterers generally enter into long term charter contracts and prefer to continue using incumbent vessels

rather than locate and contract a time charter with a new vessel provided the operator continues to meet

performance standards. As such, our long-standing relationships with our customers, including Pertamina, our

largest customer and the state-owned oil company operating nine refineries around Indonesia, has also further

allowed us to leverage these favorable industry dynamics. We believe that our strong track record in providing

Pertamina and our other customers with shipping services and their familiarity with us has allowed us to maintain a

stable and high utilization rate of our vessels and a high rate of renewal or re-contracting of our time charters. As of

December 31, 2012, 2013 and 2014 and March 31, 2015 the number of vessels in our fleet on time charters with

Pertamina was 16, 18, 15 and 15, respectively.

Complementary shipyard to provide a new stream of recurring revenue and additional cost competitiveness

In 2012, we expanded into a new line of business that is also complementary to our shipping business

when we commenced shipbuilding services at our shipyard. We expect to commence operations of our floating

dry dock, which has a planned capacity of 50,000 DWT, in the fourth quarter of 2015 and will allow us to offer

ship repair and maintenance and other shipyard services. We believe ship repair and maintenance provides a

recurring revenue stream, as international classification societies require that vessels conduct an internal

inspection every five years and an intermediate inspection approximately every 2.5 years.

Our shipyard is in close proximity to Singapore and is strategically located in a Free Trade Zone in the

Malacca Strait, one of the busiest international shipping lanes in the world. The first phase of our shipyard has a

total land area we estimate is approximately 50 hectares. Our shipyard benefits from deep surrounding water of

up to 12.0 meters in coastal depth, and will be able to accommodate the docking of up to 40 vessels per year and

the construction of up to seven vessels simultaneously and construction of several vessels each year. As our

shipyard is located in a Free Trade Zone, we enjoy various tax, custom and excise incentives, including the

expeditious clearance of customs for imported construction materials and equipment and exemption from

custom duties, lowering our cost incurred for shipbuilding and providing repair and maintenance services and

increasing our competitiveness against shipyards located outside of Free Trade Zones. We commenced

providing shipbuilding services in 2012 and offer complete design and construction services for vessels of

various specifications and functions, including oil tankers, floating storage offloading vessels and other marine

vessels. As of March 31, 2015, we had five vessels under construction, including three 17,500 DWT oil tankers

for Pertamina under three different agreements that we entered into in 2013 and 2014 and two oil tankers under

construction for our affiliates (under agreements that are pending execution), which we intend to charter-in

following delivery and acceptance by our affiliates. We also intend to offer ship repair and maintenance services

to third parties and to our own vessels after the completion of our floating dry dock. We believe that our

shipyard will allow us to provide additional services to our long-standing customers, such as Pertamina, as well

as providing repair and maintenance services to our own vessels, which we expect will result in higher operating

margins and less down time for our vessels.

Highly experienced management team and well-trained and qualified crew

We have an experienced management team with extensive experience and expertise in the shipping

industry, covering all areas of shipping operations, including vessel acquisition, sales and marketing, operational

planning, cost management and recruitment and training of crew. The majority of the members of both our

Board of Commissioners and Board of Directors have more than a decade of working experience in the shipping

industry and a number of our commissioners and directors have more than 30 years of working experience in the

shipping industry. As a result, our management team enjoys strong relationships with various key stakeholders

in the domestic shipping industry, including the Indonesia maritime authorities, Indonesia state-owned oil and

gas companies, and domestic shipping industry associations, such as the Indonesian national Ship Owners

Association (“INSA”) and the Indonesian Shipbuilding and Offshore Association (Ikatan Perusahaan Industri

Kapal dan Lepas Pantai Indonesia) (“IPERINDO”), which is critical to maintaining our long-standing

relationships with customers. In addition, our technical managers provide us with a qualified marine crew, with

more than 725 contracted seafarers as of March 31, 2015, to whom we and our technical managers provide

periodic training on international standards for the safety and operation of our vessels. We have been able to

achieve a strong track record of improving financial performance through a well-trained and qualified crew, our

strong understanding of the domestic shipping industry, underpinned by over 30 years of operational experience

and interaction with key stakeholders in the domestic shipping industry and our acquisition of well-constructed

and maintained pre-owned vessels that meet our customers’ demands. Our net revenue has grown at a CAGR of

33.6% over the years ended December 31, 2012, 2013 and 2014, where our revenue for the same periods

amounted to US$71.4 million, US$106.4 million and US$127.5 million, respectively. Over the same periods,

we also enjoyed stable EBITDA margins, which were 45.6%, 41.7% and 47.3%, respectively.

Strategies

We intend to continue increasing our revenue and market share through the following key strategies:

Expand our fleet and maintain an optimal fleet mix

Demand for crude oil, petroleum products and LPG shipping by oil and chemical suppliers have had and

are expected to continue to have a significant impact on our results of operations. Indonesian domestic demand

for oil and gas and chemical products has been growing over the recent years. We expect that increasing demand

for oil and gas products in Indonesia, supported by the Indonesian cabotage laws, will increase demand for

Indonesian flagged vessels over the coming years. With the implementation of cabotage principles into

Indonesian shipping laws, there has been an increase in the number of Indonesian-flagged vessels and a decrease

in foreign-flagged vessels operating in Indonesian waters. According to Drewry, between 2006 and 2013, the

number of Indonesian-flagged vessels increased from 6,428 to 13,120 at a CAGR of 10.7% and the aggregate

DWT capacity of Indonesian-flagged vessels increased from 2.9 million DWT to 8.2 million DWT at a CAGR

of 16.0%. The domestic movement of fuel oil has also increased from 61.6 million tons in 2010 to 72.0 million

tons in 2013, with a CAGR of 5.3%, according to Drewry. We intend to monitor the market for pre-owned

vessels and acquire well-constructed and maintained pre-owned vessels that meet our selection criteria to grow

our fleet. To achieve timely settlement of opportunities to acquire pre-owned vessels, we frequently bridge the

acquisition cost with cash on hand or with loans from our shareholders and then refinance the vessel with debt

capital post acquisition. We intend to continue to practices and financial management and prudently acquire

vessels in view of market intelligence on future vessel requirements of our customers, our financing options and

our expected return on the vessel to be purchased. We also plan to optimize our marketing and administrative

functions so as to streamline the tender process for new charter contracts, which often requires long

documentation processes.

Increase market share by taking advantage of favorable industry dynamics

We intend to capitalize on the favorable dynamics for our Company in the Indonesian oil and gas and

chemical shipping industry and take advantage of growing Indonesian demand for production and distribution of

gasoline, diesel, jet fuel and chemicals, as well as the implementation of cabotage principles into Indonesian

shipping laws, to increase our market share. We intend to leverage the favorable Indonesian tax regime, under

which Indonesian entities enjoy a competitive advantage over the foreign entities by virtue of being subject to a

significantly lower final tax of 1.2% on charter fees as opposed to the up-to-20.0% withholding tax that the

foreign entities are subject to. We also believe our market position makes us an attractive joint venture partner

for foreign investors in Indonesia, and we actively seek to engage in strategic alliances with foreign companies

so as to leverage their technical expertise and increase our opportunities to participate in joint tenders for long-

term time charter contracts to provide high DWT capacity vessels to Pertamina and other companies. We also

intend to capitalize on our position as one of the few domestic shipyards in an active international maritime

route to capture a market share of recurring maintenance and repair service contracts upon the completion of our

floating dry dock.

Maintain prudent financial management

We intend to maintain prudent financial management practices to allow for long-term sustainable growth

through organic expansion, such as by strategically acquiring well-constructed and maintained pre-owned

vessels to fill immediate demand in the market, and income diversification, such as by expanding into the

shipyard business. We conduct comprehensive financial planning and budgeting regularly to ensure proper

capital management and resource allocation and maintain conservative capital expenditure practices to ensure

that we have adequate resources and financing to support growth, especially with respect to the prudent

acquisition of vessels to expand our fleet. We maintain adequate insurance policies in line with good industry

practice, including protection and indemnity insurance coverage of up to US$5.0 million per incident and

US$27.2 million for hull and machinery across our entire fleet. Through our prudent financial management, we

have managed to maintain healthy operating cash flows and a conservative credit profile, which has allowed us

to diversify our access to available capital sources and benefit from support from credible financial institutions

such as Bank Mandiri, OCBC Bank and BCA. We believe that our prudent financial management has given us a

strong cash position and access to available credit facilities, which has increased our ability to respond quickly

and competitively to business opportunities and fund growth and expansion.

Maintain relationships with major customers and expand customer base

We intend to continue to strengthen our long-standing relationships with Pertamina and our other

customers by seeking ways to increase our level and scope of services we currently provide to them. We

expanded our relationship with Pertamina beyond shipping services when we commenced construction of three

17,500 DWT oil tankers for Pertamina at our shipyard in 2013 and 2014, and also intend to seek opportunities to

provide ship repair and maintenance services for Pertamina’s own vessel fleet. We believe our market position

makes us an attractive joint venture partner, and we are actively seeking to engage in strategic alliances with

foreign companies so as to leverage their technical expertise and increase our opportunities to participate in joint

tenders for long-term time charter contracts to provide high DWT capacity vessels to Pertamina and our other

major Indonesian customers. Our sales teams actively manage our relationships with our major customers in

order to better understand their maritime logistics requirements and ensure high renewal rates on existing time

charters and win new contracts. We also seek to leverage our reputation for meeting the maritime safety and

operating standards of our major domestic and international oil and gas customers to attract new customers who

require high-quality Indonesian-flagged shipping services.

Enhance competitiveness through increasing operational efficiency and maintaining high safety standards

We seek to increase our operational efficiency by actively managing and lowering our cost of revenue and

operating expenses. Upon completion of our floating dry dock, we expect to provide in-house repair and

maintenance services for a portion of our fleet which will result in lower maintenance costs, less time in dry

dock and higher operating margins for our vessels. As the capital expenditures and other costs for maintaining a

vessel in good operating condition increase with the age of the vessel, and older vessels typically have lower

utilization rates due to their higher maintenance requirements, we closely monitor our vessel repair and

maintenance costs, which comprise the largest component of our vessel operational expenses, other than bunker

fuel. We typically replace vessels when they require dry docking and the cost of further repair and maintenance

of the vessel exceeds the price of acquiring a similar vessel on the pre-owned market. We also intend to focus on

maintaining our high safety standards through, among others, ensuring that our vessels are always certified safe

and seaworthy in accordance with all applicable rules and regulations, including certificate of class for hull and

machinery, international safety management, international ship and port facility security and maritime labor.

Our maintenance, including replacement of parts, is performed according to pre-established schedules,

regardless of whether the vessel or parts show any signs of defects. We plan to maintain our internal controls

with respect to management, quality control, environmental and safety. We believe that maintaining such best

practices will, increase the effectiveness of our employees, improve the efficiency of our business and increase

our ability to execute our business strategies and remain competitive and improve our overall business

performance.

Develop human capital and maintain high service reliability

As Indonesian law requires that Indonesian flagged-vessels be operated by Indonesian crews, we believe

that it is critical to have a skilled work force composed of Indonesian seafarers. We intend to continue our

practices, together with our technical managers, to invest in and provide periodic training to the marine crew

that operates our vessels on international standards for safety and operation, so as to, among other things, allow

us to align the marine crew’s day-to-day actions with our strategic business objectives and increase the quality

of service we provide to our customers. We also expect to continue to train the marine crew, together with our

technical managers, to maintain strong vessel safety records, and maintain compliance with domestic and

international rules and regulations for the shipping industry. We expect to continue to place a strong emphasis

on technical management, particularly in the areas of health, safety, security and the environment, and crewing

and maintenance of vessels, all of which is designed to help our work force deliver high quality service to our

customers.

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION AND OPERATING

DATA

The summary historical consolidated financial information as of December 31, 2012, 2013, and 2014, and

for the years then ended, presented below, has been derived from our Audited Consolidated Financial

Statements included elsewhere in this Updates. The summary historical consolidated financial information as of

March 31, 2015 and for the three-month periods ended March 31, 2014 and 2015, presented below, has been

derived from our Unaudited Interim Consolidated Financial Statements included elsewhere in this Updates.

Our Audited Consolidated Financial Statements have been audited by Kosasih, Nurdiyaman, Tjahjo &

Rekan (a member of Crowe Horwath International) (“KNTR”), independent auditors, in accordance with

Standards on Auditing established by the IICPA, as stated in their audit reports appearing elsewhere in this

Updates. Certain figures in the Audited Consolidated Financial Statements as of December 31, 2014 as set forth

in note 36 to our Unaudited Interim Consolidated Financial Statements attached hereto have been reclassified

to conform with the presentation used in the Unaudited Interim Consolidated Financial Statements as of

March 31, 2015. These reclassified figures as of December 31, 2014 are included in the Unaudited Interim

Consolidated Financial Statements.

Our Unaudited Interim Consolidated Financial Statements have been reviewed by KNTR, independent

auditors, in accordance with SRE 2410 established by the IICPA, as stated in their review report appearing

elsewhere in this Updates. A review conducted in accordance with SRE 2410 established by the IICPA is

substantially less in scope than an audit conducted in accordance with Standards on Auditing established by the

IICPA and consequently, does not enable KNTR to obtain assurance that they would become aware of all

significant matters that might be identified in an audit. Accordingly, they do not express an audit opinion on the

Unaudited Interim Consolidated Financial Statements.

The summary historical consolidated financial information as of March 31, 2015 and for the three-month

periods ended March 31, 2014 and 2015 is not indicative of the results that may be expected for any other

interim period or for the entire financial year.

Our Audited Consolidated Financial Statements, which are prepared in accordance with Indonesian FAS

and presented in U.S. dollars, are not intended to present our consolidated financial position, financial

performance, or cash flows in accordance with accounting principles and practices generally accepted in

countries and jurisdictions other than those in Indonesia. Indonesian FAS differ in certain significant respects

from IFRS.

Statements of Comprehensive Income

For the year ended December 31,

For the three months ended

March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$) (US$)

Net Revenues ................................................................. 71,391,473 106,404,574 127,477,386 26,212,208 33,954,116

Cost of Revenues ............................................................ 48,262,552 70,533,203 76,166,041 15,637,865 21,367,623 Gross Profit .................................................................... 23,128,921 35,871,371 51,311,345 10,574,343 12,586,493 Operating Expenses ........................................................ 5,520,708 6,692,605 6,693,440 1,105,358 1,692,618

Income From Operations ............................................. 17,608,213 29,178,766 44,617,905 9,468,985 10,893,875

Other Income (Expenses) — Net .................................... (6,307,525) 1,078,005 (9,409,395) (6,562,221) 1,318,021

Income Before Income Tax Benefit (Expense) ............ 11,300,688 30,256,771 35,208,510 2,906,764 12,211,896

Income Tax Expense — Net ........................................... (775,312) (2,561) (1,966,860) (1,016,426) (1,866)

Income before proforma income adjustment

arising from restructuring transactions of

entities under common control 10,525,376 30,254,210 33,241,650 1,890,338 12,210,030

Proforma income arising from restructuring

transactions of entities under common

control ....................................................................... (6,867,063) — — — — Income for the Year ...................................................... 3,658,313 30,254,210 33,241,650 1,890,338 12,210,030

Other Comprehensive Income......................................... — — — — (121,393)

Total Comprehensive Income for the Year ................. 3,658,313 30,254,210 33,241,650 1,890,338 12,088,637

Balance Sheets

As of December 31,

As of

March 31,

2012

2013

2014

2015

(Unaudited) (US$) (US$)

Current Assets

Cash and Cash Equivalents ...................................................................................................................... 3,957,591 2,972,951 20,366,223(1) 13,168,697

Restricted Cash ....................................................................................................................................... 202,506 74,228 389,898(1) 453,178

Trade Receivables — third parties net of allowance for impairment of US$512,059 as of March 2015 US$571,652 as of December 31, 2014 and US$259,783 as of December 31, 2013 and US$25,779 as of December 31, 2012 ....................................................................................................................... 4,305,707 17,001,764 6,324,121 15,765,309

Related Party .......................................................................................................................................... 193,600 338,291 — 6,400,000 Other receivables — third parties ............................................................................................................. 1,195,623 537,590 745,127 554,006 Due from a Related Party ........................................................................................................................ 2,106 — — — Unbilled revenues ................................................................................................................................... 2,863,219 1,770,248 8,324,238 3,663,862 Inventories .............................................................................................................................................. 1,835,656 3,985,503 4,643,327 4,486,503 Prepaid tax .............................................................................................................................................. 169,319 531,214 1,069,839 1,034,855 Estimated earnings in excess of billing on contracts.................................................................................. — — 1,986,813 1,830,707 Advances and Prepaid Expenses .............................................................................................................. 3,730,151 3,378,002 7,192,776 6,794,644 Non-current assets for sale ....................................................................................................................... — 9,000,000 — —

Total Current Asset ................................................................................................................................. 18,455,478 39,589,791 51,042,362 54,151,761

Non-Current Assets

Fixed assets — net of accumulated depreciation of US$81,406,680 as of March 31, 2015, US$77,927,498 as of December 31, 2014, US$72,868,739 as of December 31, 2013 and US$62,464,036 as of December 31, 2012 ........................................................................................... 268,599,501 326,860,272 383,221,829 396,251,798

Intangible Assets — net of accumulated amortization of US$104,598 as of March 31, 2015, US$91,896

as of December 31, 2014 and US$41,488 as of December 31, 2013 .................................................... 39,963 159,237 111,929 99,277

Deferred Tax Assets ................................................................................................................................ 552,797 1,528,136 776,951 1,073,551 Estimated claims for tax refund ............................................................................................................... — — — 2,359 Other Non-Current Assets ....................................................................................................................... 7,384,166 6,509,680 6,509,309 11,526,193

Total Non-Current Assets ........................................................................................................................ 276,576,427 335,057,325 390,620,018 408,953,128

Total Assets ............................................................................................................................................ 295,031,905 374,647,116 441,662,380 463,104,889

LIABILITIES AND EQUITY

Current Liabilities

Trade Payables

Third Parties ........................................................................................................................................... 5,191,307 8,312,673 11,474,648 8,665,726 Related Parties ........................................................................................................................................ 390,849 769,745 594,510 139,175 Other Payables ........................................................................................................................................ 3,896,532 2,995,088 1,416,898 1,193,213 Billing in excess of estimated earnings on contracts.................................................................................. — 1,478,502 8,239,317

(1) 10,569,970 Taxes Payable ......................................................................................................................................... 326,410 235,653 479,795 505,266 Accrued Expenses ................................................................................................................................... 3,470,317 4,469,704 5,621,040 9,809,955 Short-Term Bank Loans .......................................................................................................................... 14,037,368 12,633,950 11,985,016 16,014,411 Due to a Related Party ............................................................................................................................. 34,701,884 35,528,480 3,925,903 17,140,723

Current maturities of Long-Term Loans:

Bank Loans ............................................................................................................................................. 27,421,524 31,912,329 38,197,498 36,948,063 Finance Lease Payables ........................................................................................................................... 278,017 204,425 96,888 63,936 Consumer Financing Payables ................................................................................................................. 151,568 132,597 182,455 151,195

Total Current Liabilities .......................................................................................................................... 89,865,776 98,673,146 82,213,968 101,201,633

Non-Current Liabilities

Long-Term Loan — net of current maturities

Bank Loans ............................................................................................................................................. 121,200,034 136,697,661 120,795,866 111,076,210 Finance Lease Payables ........................................................................................................................... 306,084 80,624 54,812 44,967 Consumer Financing Payables ................................................................................................................. 167,601 100,730 148,847 111,924 Employees’ Benefits Liabilities ............................................................................................................... 566,713 577,617 655,443 788,074

Total Liabilities ..................................................................................................................................... 212,106,208 236,129,778 203,868,936 213,222,808

EQUITY

Total Equity .......................................................................................................................................... 82,925,697 138,517,338 237,793,444 249,882,081

Total Liabilities and Equity .................................................................................................................. 295,031,905 374,647,116 441,662,380 463,104,889

Note: (1) Reclassified unaudited.

Statements of Cash Flows

For the year ended December 31,

For the three months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$) (US$)

Net Cash Provided by (used in) Operating

Activities ................................................................ 8,094,055 20,224,533 45,353,490 10,045,930 (1,787,560)

Cash Flows from Investing Activities

Proceeds from Disposals of Fixed Assets and

Non-current Assets Held for Sale ............................ 833,219 21,456 11,195,598 — 83,520 Acquisition of Fixed Assets ......................................... (53,299,171) (75,908,951) (63,800,977) (1,318,648) (14,702,431) Acquisition of Intangible Assets .................................. (39,963) (160,762) (3,100) (4,702) —

Net Cash Used In Investing Activities ......................... (52,505,915) (76,048,257) (52,608,479) (1,323,350) (14,618,911)

Net Cash Provided by (used in) Financing

Activities ................................................................ 43,837,359 54,902,947 25,483,411 (7,798,254) 8,898,083

Non-GAAP Financial Measures

As of and for

the year ended December 31,

As of and

for the

three months

ended

March 31,

As of and

for the twelve

months

ended

March 31,(1)

2012

2013

2014

2015

2015

(US$ in millions, except percentages and ratios) EBITDA(2)(3) ............................................................... 32.5 44.4 60.3 15.3 62.0 EBITDA Margin(4)..................................................... 45.6

% 41.7

% 47.3

% 45.0

% 45.9

% Total Debt(5) ................................................................ 163.6 181.8 171.5 164.4 164.4 Cash and Cash Equivalents ......................................... 4.0 3.0 20.4 13.2 13.2 Net Debt(6) ................................................................... 159.6 178.8 151.1 151.2 151.2 Total Debt / EBITDA ................................................. 5.0x 4.1x 2.8x — 2.7x Net Debt / EBITDA .................................................... 4.9x 4.0x 2.5x — 2.4x Finance Costs ............................................................. 8.9 9.6 9.6 1.7 8.7 EBITDA / Finance Costs ............................................ 3.7x 4.6x 6.3x 9.0x 7.1x Notes: (1) The information indicated is for the twelve month period (LTM) ended March 31, 2015. (2) We define EBITDA as net income before (i) proforma income arising from restructuring transactions of entities under common control,

(ii) income tax benefit (expense), (iii) other income (expense) — net and (iv) depreciation and amortization. This term, as we define it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with IFRS. EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with IFRS. The following table sets forth a reconciliation of EBITDA with our net income for the periods indicated:

For the year ended December 31,

For the

three months ended

March 31,

2012

2013

2014

2015

(US$ in millions) Net Income ............................................................................................................................................ 3.7 30.3 33.2 12.2 Proforma Income Arising from Restructuring Transactions of Entities Under Common

Control ............................................................................................................................................ 6.9 — — — Income Tax Benefit (Expense) ................................................................................................................ 0.8 — 2.0 — Other Income (Expense) — Net .............................................................................................................. 6.3 (1.1) 9.4 (1.3) Depreciation and Amortization ............................................................................................................... 14.9 15.2 15.7 4.4

EBITDA (unaudited) ............................................................................................................................ 32.5 44.4 60.3 15.3

(3) We calculate EBITDA for the twelve months ended March 31, 2015 as EBITDA for the year ended December 31, 2014, minus the EBITDA for the three months ended March 31, 2014, plus EBITDA for the three months ended March 31, 2015. The following table sets forth a reconciliation of EBITDA with our net income for the twelve months ended March 31, 2015:

For the twelve months ended March 31,

2015

(US$ in millions) Net Income ........................................................................................................................................................................................ 43.6 Proforma Income Arising from Restructuring Transactions of Entities Under Common Control............................................................ — Income Tax Benefit (Expense) ............................................................................................................................................................ 1.0 Other Income (Expense) — Net .......................................................................................................................................................... 1.5 Depreciation and Amortization ........................................................................................................................................................... 15.9

EBITDA (unaudited) ........................................................................................................................................................................ 62.0

(4) We calculate EBITDA Margin as EBITDA as a percentage of net revenues for a given period. (5) Total debt includes short-term bank loans, long-term bank loans, finance lease payables and consumer financing payable, but excludes

shareholder loans and refund guarantees. (6) We calculate net debt as total debt less cash and cash equivalents.

Operating Data

The table below sets forth certain information regarding our fleet for the periods indicated:

For the year ended December 31,

For the three months

ended March 31,

2012

2013

2014

2015

Number of vessels ................................................................................ 30 33 33 35 Fleet capacity (DWT thousands) ........................................................... 810 1,251 1,333 1,341 Fleet-wide utilization rate(1) ................................................................... 95.9% 98.1% 88.1% 89.2%

Note: (1) Utilization rate for a vessel is calculated by dividing the total number of days in a given period for which the vessel earns a daily charter rate

divided by the total number of days such a vessel is available. A vessel is considered available for the days the vessel was in our fleet in a period. We do not consider a vessel to be in our fleet if either it has been recently acquired and is in preparation for deployment or if the vessel is no longer under time charter and has been designated for sale. The fleet-wide utilization rate indicates the average rate for all of the vessels in

our fleet during a given period weighted by DWT capacity.

The table below sets forth certain information regarding our time charters with Pertamina as of the dates

indicated:

As of December 31,

As of March 31,

2012

2013

2014

2015

Number of vessels on time charter with Pertamina .................................... 16 18 15 15 Total number of vessels in our fleet .......................................................... 30 33 33 35 Percentage of vessels on time charter with Pertamina ............................... 53.3% 54.5% 45.5% 42.9% DWT capacity of vessels on time charter with Pertamina (DWT) ............. 575,739 641,409 605,020 608,099 Total DWT capacity of our fleet (DWT) ................................................... 809,664 1,250,859 1,333,095 1,340,879 Percentage of DWT capacity on time charter with Pertamina .................... 71.1% 51.3% 45.4% 45.4%

The table below sets forth certain information regarding our time charters as of the dates indicated:

As of December 31,

As of March 31,

2012

2013

2014

2015

Number of vessels on time charters........................................................ 18 20 17 19 Total number of vessels in our fleet ....................................................... 30 33 33 35 Percentage of vessels on time charters ................................................... 60.0% 60.6% 51.5% 54.3% DWT capacity of vessels on time charters (DWT) ................................. 719,937 784,692 748,303 1,169,302 Total DWT capacity of our fleet (DWT) ................................................ 809,664 1,250,859 1,333,095 1,340,879 Percentage of DWT capacity on time charters ........................................ 88.9% 62.7% 56.1% 87.2%

RISK FACTORS

Risks Relating to Our Business

We are exposed to uncertainty in the application of Bank Indonesia regulation on the use of foreign currency

for Indonesian domestic transactions

Substantially all of our revenues in the shipping and shipbuilding industries are derived from customers

domiciled or operating in Indonesia. Our largest customer, Pertamina, the Indonesian state-owned oil company,

accounted for approximately 68.2%, 46.3%, 52.4% and 53.2% of our net revenues in the years ended

December 31, 2012, 2013 and 2014 and the three months ended March 31, 2015, respectively. Our payments for

the acquisition of vessels to expand our fleet, and for ongoing operation and maintenance of our fleet, are

principally denominated in U.S. dollars, while our time charter and spot charter agreements with Pertamina and

our other customers are denominated either in U.S. dollars or the Rupiah-equivalent of U.S. dollars. As a result,

the currency which primarily influences our revenues and expenses, and the currency of the primary economic

environment in which we operate — our functional currency — is U.S. dollars.

Effective July 1, 2015, Bank Indonesia Regulation No. 17/3/PBI/2015 on the Obligation to Use Rupiah

(“PBI 17/3/2015”) in the Territory of Indonesia requires that whenever an Indonesian party enters into, amends

or renews an agreement for transactions with customers domiciled or operating in Indonesia, it must denominate

the contract price and receive payment in Rupiah. There is no express exception under PBI 17/3/2015 that

applies either to companies whose functional currency is U.S. dollars and/or to the shipping or shipbuilding

industries in Indonesia. We and other participants in the shipping industry are currently in the process of seeking

clarification from Bank Indonesia on the application of, and a possible express exception for, domestic parties

whose functional currency is U.S. dollars or companies engaged in the Indonesian shipping and/or shipbuilding

industries. As an Indonesian company, we cannot assure you we will continue to be able to price our shipping

charters with other Indonesian domestic companies, including Pertamina, in U.S. dollars or the Rupiah-

equivalent of U.S. dollars. We also cannot assure you that PBI 17/3/2015 will not be applied to our business or

that any such application will not result in significant changes in economic facts and circumstances affecting our

business that may warrant a change in our functional currency. In addition, our failure to comply with PBI

17/3/2015 may expose us to administrative and/or criminal sanctions, which may include fines, prohibition from

undertaking payment activities or revocation of our business license. The application of PBI 17/3/2015 to our

shipping and shipbuilding businesses could require us to denominate a larger portion of our revenues in Rupiah,

which may result in the Rupiah becoming our functional currency.

We expect that a large portion of our expenses, including payments for the acquisition of vessels and

ongoing operation and maintenance of our fleet, will continue to be denominated in U.S. dollars. In addition, a

large portion of our debt are denominated in U.S. dollars. Any depreciation in the value of the Rupiah against

the U.S. dollar could cause us to have difficulty meeting our U.S. dollar-denominated payment obligations,

including expenses and debt obligations, and could result in an increase in the value of our debt on our balance

sheets. Any of the above factors could materially and adversely affect our business, financial condition and

results of operations.

Any change in the cabotage principle under the Indonesian shipping law or other laws or regulations

limiting international competition in the Indonesian shipping industry could negatively impact our business

Our shipping business benefits from the implementation of the cabotage principle under Indonesian

shipping laws that limits international competition for domestic shipping services, particularly in the oil and gas

industry. These laws require vessel charterers operating domestically in Indonesia to favor domestically-owned

and operated shipping providers. Our business has grown significantly since the implementation of cabotage

principles under the Indonesian shipping law in 2005 due to the limited competition among Indonesian-owned

shipping services providers. In addition, the current tax regime in Indonesia provides a competitive advantage to

Indonesian shipping service providers over international competitors for international charters through tax

advantages to Indonesian entities. An abolishment or any change in the cabotage principle under Indonesian

shipping laws or any change to the tax regime in Indonesia relating to vessel charters may reduce our

competitive advantage and result in increased competition from international providers. Any such event could

materially and adversely affect our business, financial condition and results of operations.

We depend on a small number of customers for a significant portion of our shipping revenues under time

charters, and any decrease in time charters with these customers could adversely affect our business and

results of operations

We are dependent on a small number of customers for a substantial portion of our net revenues. Our three

largest customers, comprising Pertamina, ConocoPhillips (Grissik) Ltd. (“ConocoPhillips”) and Camar

Resources Canada, accounted for approximately 74.3%, 58.7%, 61.9% of our net revenues in the years ended

December 31, 2012, 2013 and 2014, respectively. Pertamina, the Indonesian state-owned oil company, has been

our largest customer since the inception of our business and accounted for approximately 68.2%, 46.3%, 52.4%

and 53.2% of our net revenues in the years ended December 31, 2012, 2013 and 2014 and the three months

ended March 31, 2015, respectively. All of our third party shipyard revenues are derived from shipbuilding

contracts with Pertamina. In addition, time charters accounted for approximately 74.4%, 60.2%, 60.8% and

72.8% of our shipping revenues in the years ended December 31, 2012, 2013 and 2014 and the three months

ended March 31, 2015.

We anticipate that time charters with Pertamina, ConocoPhillips and Camar Resources will continue to

account for a significant portion of our net revenues for the foreseeable future. These customers may be able to

negotiate favorable terms on charter contracts, and we may be required to accept such terms even if they are less

favorable to us. For instance, we may forego more profitable spot charter opportunities if Pertamina requires our

vessels for a time charter. The loss of any of these major customers, reduced demand from them, delayed

payments from them or a material adverse change in their financial condition, could, in turn, cause us to lose a

significant portion of our shipping and shipyard revenues. In addition, a material adverse change in our major

customers’ financial condition could cause them to negotiate for lower charter rates in the future. Any of the

foregoing factors could materially and adversely affect our business, financial condition and results of

operations.

We are exposed to the creditworthiness of our customers

The charter fees for our shipping business are typically invoiced in arrears; therefore, we are exposed to

the creditworthiness of our customers on a short-term basis. Related credit risks are inherent as we do not

typically collateralize receivables due from customers. Moreover, because we depend on a small number of

customers for a significant portion of our revenues, we are dependent on the due performance of such charterers

of their respective obligations under their charters, and a default or delay by any such charterer in the payment

of the charter income, or other failure by a charterer to perform its obligations under a charter, could result in a

loss of a substantial portion of our revenues. We provide estimates for uncollectible accounts based primarily on

our judgment using historical losses, current economic conditions and individual evaluations of each customer

as evidence supporting the receivables valuations stated on our financial statements. However, our receivables

valuation estimates may not be accurate and receivables due from customers reflected in our financial

statements may not be collectible.

Demand for our vessels depends on the macroeconomic factors beyond our control

Our operations consist primarily of the shipping of crude oil, petroleum products and LPG. Historically,

the market for the transportation of crude oil, petroleum and LPG has been volatile, as Indonesian and global

demand for these products has fluctuated. Demand for crude oil, petroleum products and LPG is driven in large

part by and generally follows patterns of economic development, growth and activity. If and when economic

growth experiences a slowdown or downturn, in particular in Indonesia, demand for crude oil, petroleum

products and LPG may also decrease. Accordingly, the demand for the shipping of these resources is also likely

to suffer.

The following macroeconomic factors affect the supply and demand for the shipping of crude oil,

petroleum products, LPG and other natural resources:

• changes in global oil and gas production, in particular the relative contributions from OPEC and

non-OPEC countries and the impact of these changes on oil and gas prices;

• export and import levels in the world oil trade or changes in trading patterns, which affect the

distances that oil and gas cargoes are transported;

• demand for energy products, in particular petroleum and associated products;

• oil and gas inventory levels, in particular in importing countries, including Indonesia;

• seasonal changes in the demand for crude oil, petroleum products and LPG;

• governmental policies, in particular with regard to environmental regulation and alternative energy;

and

• social and political instability in producing or importing countries, including war, terrorism or labor

unrest.

These factors are beyond our control, and, as a result, the nature, timing and degree of changes in our

industry conditions are unpredictable. A material decline in the Indonesian demand for crude oil, petroleum

products and LPG shipping services could materially adversely affect our business, financial condition and

results of operations.

We had negative working capital positions in the past and may be unable to generate sufficient revenue from

operations to pay our operating expenses or execute our business plans

As of December 31, 2012, 2013 and 2014 and March 31, 2015, our current liabilities exceeded our current

assets by US$71.4 million, US$59.1 million, US$31.2 million and US$47.0 million, respectively. We operate in

a capital intensive industry and frequently purchase vessels as part of our ongoing business operations. In

addition, the construction of our shipyard has required a significant amount of capital. We typically fund our

vessel acquisitions and have primarily funded the construction of our shipyard through cash flows from

operating activities and medium to long-term debt, including bank loans and shareholder loans. Our negative

working capital position has primarily resulted from substantial current maturities of our long-term bank loans

and amounts due to related parties, which primarily represents amounts owed under shareholder loans. These

shareholder loans are classified as current liabilities as they are payable on demand. As of December 31, 2012,

2013 and 2014 and March 31, 2015, our current maturity of long-term bank loans was US$27.4 million,

US$31.9 million, US$38.2 million and US$36.9 million, respectively. We believe that we have adequate

working capital for our present requirements and that our net cash generated from operating activities, together

with cash and cash equivalents and funds from financing sources, will provide sufficient funds to satisfy our

working capital requirements for the next 12 months. However, if our future cash from operating activities is

lower than expected or we fail to obtain additional financing in the future, this would impede our ability to make

continued investments, which could materially and adversely affect our business, financial condition and results

of operations.

We may not be in possession of all material licenses necessary to operate our business

Our business operations require various licenses and approvals from the Government or local

governments to carry out our operations, including, among others, the sea transport company business license

(surat izin usaha perusahaan angkutan laut), the transportation business license (izin usaha pengangkutan), the

industrial business license (izin usaha industri) and the ship building and ship repairing business license. In

addition, based on Law No. 17 of 2008 on Shipping (“Shipping Law”), each of our vessels is also required to

have various vessel certificates (“Vessel Certificates”), including, among others, the certificate of vessel safety

and certificate of load line. The term of the Vessel Certificates varies ranging from 3 months to 5 years, and

each type of vessel may need a different number of Vessel Certificates. The Vessel Certificates are required to

obtain port clearance from the relevant authority in Indonesia each time a vessel leaves a port. As a practical

matter, in the shipping business, vessels may have one or more expired Vessel Certificates from time to time.

For example, a Vessel Certificate may expire while our vessel is at sea and the Vessel Certificate may only be

extended while the vessel is at port.

With regard to the transportation business license, based on Government Regulation No. 36 of 2004 (“GR

36/2004”), a company is only required to obtain a transportation business license if it transports oil and/or gas

on a spot charter arrangement or in the event that it transports oil and/or gas for a company without a processing

business license (izin usaha pengolahan) a storage business license (izin usaha penyimpanan) or a commercial

business license (izin usaha niaga). We transport oil from Pertamina under certain of our time charters with the

latter directing the movement of our vessels, and we understand from the Directorate General of Oil and Gas

(“DGOG”) that Pertamina is currently in possession of a commercial business license. Thus, based on GR

36/2004, we believe we are not required to obtain a transportation business license for our vessels under on time

charters with Pertamina.

Certain of our Vessel Certificates that have not been renewed or are in the process of being renewed and

certain transportation business licenses relating to vessels, KM Eternity XLVII and KM Discovery XLVI

(recently acquired vessels) which we are currently in the process of being obtained.

Based on Ministry of Transportation Regulation No. PM 82 of 2014 on the Issuance Method of Port

Clearance, each vessel must have a Vessel Certificate prior to sailing and any failure to have a valid Vessel

Certificate could result in the inability of the relevant vessel to obtain port clearance to sail from the relevant

port authority. In addition, based on Law No. 22 of 2001 on Oil and Gas, any person engaged in the oil and gas

transportation business without a transportation business license may be subject to a penalty of imprisonment for

a maximum period of four years and a fine in the maximum amount of Rp.40.0 billion. Historically, we have not

encountered difficulties in renewing our Vessel Certificates or obtaining port clearance for any of our vessels

nor have we been subject to any penalty for not having a transportation business license for certain of our

vessels. We cannot assure you that we have all material licenses and approvals to operate our business and will

be able to renew, obtain or secure licenses for our respective business activities as currently required or as may

be required in the future, or that we will not receive sanctions arising from the failure to renew, obtain or secure

any required licenses. Failure to do so could materially and adversely affect our business, financial condition

and results of operations.

We acquire pre-owned vessels in the international market based on prospective needs of our customers, and

any failure by us to find a customer for our acquired vessel could materially and adversely affect our

business, financial condition and results of operations

We acquired four pre-owned vessels from January 1, 2015 to date, purchased in the international market

with a total of 51,632 DWT. Each of our vessel acquisitions is based on expected demand from our customers

and upcoming tenders for time charters. We invest substantial capital resources to acquire pre-owned vessels in

the international market based on our understanding of the market and our customers’ requirements. Although

we have, in the past, been successful in finding customers for our acquired vessels, we cannot assure you that

we will always be successful in matching our acquired vessels to customer demand. A significant expenditure to

acquire a vessel followed by a failure to charter the vessel to a customer may materially and adversely affect our

business, financial condition and results of operations.

Our fleet of pre-owned vessels exposes us to increased operating costs and capital expenses which could

adversely affect our earnings

As of March 31, 2015, the vessels in our fleet ranged in age from 13 to 44 years, with an average age of

23.1 years and an average age of 17.1 years when weighted by DWT capacity. In general, capital expenditures

and other costs for maintaining a vessel in good operating condition increase with the age of the vessel. Older

vessels are typically more costly to maintain than more recently constructed vessels and are subject to lower

utilization rates due to their increased maintenance requirements. As a result of decreased cost efficiency, older

vessels are typically less desirable to charterers. In addition, changes in governmental regulations and safety or

other equipment standards may require unanticipated expenditures for alterations, or the addition of new

equipment, to older vessels, or may restrict the type of activities in which such vessels may engage. As a

consequence, we may need to take our vessels out of service for longer periods of time or more often than

planned in order to perform necessary repairs or modify the vessels in order to meet such regulations. There can

be no assurance that our vessels will not require extensive repairs which would result in significant expenses and

extended periods of time during which these vessels would be out of service. In addition, if we dispose of a

vessel before it has exhausted its expected useful life, we may be required to recognize an impairment loss based

on the difference between the disposal price and the net book value. For example, in December 2013, we sold

one of our vessels and its related equipment for US$9.0 million and recognized an impairment loss of US$3.9

million, being the difference between the sale price and its net book value. We cannot assure you that, as our

vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably

during the remainder of their useful lives. If we sell our vessels, we cannot be certain that the price for which we

would sell them will be equal to or greater than their carrying amount on our financial statements at that time.

Such an occurrence could materially and adversely affect our business, financial condition and results of

operations.

Increases in bunker fuel prices may significantly increase our voyage operating expenses

Fuel oil, or bunker fuel, costs are one of our principal expenses for our spot charter business. For the years

ended December 31, 2012, 2013 and 2014 and the three months ended March 31, 2015, bunker fuel costs

comprised 16.3%, 26.9%, 22.7% and 12.0%, respectively, of our costs of revenue. Bunker fuel is consumed to

propel and maneuver our vessels and for the operation of various equipment on board each vessel ranging from

cargo operation to cooking. We also incur bunker fuel expenses when sending our vessels for dry docking,

although the expense is less significant. Bunker fuel prices typically, but not necessarily, follow crude oil prices

and generally experience significant fluctuations depending on various factors, including supply and demand for

oil and gas, geopolitical developments and developments in oil production including actions by OPEC. In recent

years, the prices for bunker fuel have been volatile. Further, the impact of bunker fuel prices on our results of

operations are also affected by any regional price differences within the bunker fuel market. In accordance with

industry practice, we are responsible for voyage expenses, including bunker fuel costs, when operating our

vessels on the spot market. Accordingly, a significant and extended increase in the cost of bunker fuel could

significantly increase the voyage expenses of our vessels, which could materially and adversely affect our

business, financial condition and results of operations to the extent that we are not able to increase our charter

rates commensurately or otherwise to recover bunker fuel cost increases from our customers.

Shipping is a business with inherent risks, and adverse incidents involving our ships may have a negative

impact on our operating results

The operation of ships involves the risk of accidents and other incidents. Our vessels sail in Indonesian

waters and on the open seas and are exposed to possible damage due to bad weather, collision with other

vessels, the possibility of being grounded or even a vessel sinking. The cargoes carried by our vessels may be

flammable, explosive and toxic and may be harmful to vessels, people and the environment. We may become

subject to personal injury or property damage claims relating to alleged exposure to hazardous substances

present on our vessels or used in our operations.

If our vessels are involved in leakage of crude oil or other flammable, explosive or toxic substances, the

damage caused by such incidents could be catastrophic. In the event of leakage from our vessels during the term

of a time charter contract, we may be liable to third parties and/or required to indemnify and hold harmless the

chartering party for losses and damages relating to environmental harm caused by leakage from our vessel.

Although we carry protection and indemnity and hull and machinery insurance policies to cover such losses,

such insurance policies may not be sufficient to cover against all our losses.

If our vessels suffer damage, they may need to be repaired at a dry docking facility. Under the terms of the

charter agreements under which our vessels generally operate, when a vessel is “off-hire” or not available for

service or otherwise deficient in its condition or performance, the charterer generally is not required to pay the

hire rate for the off-hire period, and we do not receive the charter hire rate from our insurer, as we do not insure

for such losses. Moreover, we will be responsible for all costs incurred by the vessel, unless the charterer is

responsible for the circumstances giving rise to the lack of availability. In addition, the charterer is generally

permitted, at its sole option, to extend the term of the charter by a period equal to the period of off-hire. The

costs and duration of dry dock repairs are unpredictable and can be substantial. We may have to pay dry docking

costs that our insurance would not cover. The loss of earnings while these vessels are being repaired and

repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at dry

docking facilities is sometimes limited and not all dry docking facilities are conveniently located. We may be

unable to find space at a suitable dry docking facility or we may be forced to move to a dry docking facility that

is not conveniently located to our vessels’ positions. The loss of earnings while our vessels are forced to wait for

space or to relocate to dry docking facilities that are farther away from the routes on which our vessels trade

would decrease our earnings.

In 2014, one of our Aframax vessels experienced a motor breakdown and became stranded at sea. We

received assistance from a third party and reimbursed them for their expenses. As a result, our vessel was off-

hire for approximately 34 days, and we lost charter revenues.

Although over the past five years none of our vessels has been involved in any material accident or

incident, we cannot assure you that such events will not occur in the future. Our ships are insured up to a limit of

US$5.0 million per incident for protection and indemnity coverage and US$27.2 million for hull and machinery

across our entire fleet, but we cannot assure you that such insurance always covers the costs of incidents. Future

incidents could cause our damaged vessels to be docked for an extended period of time, lead to claims against us

from other operators, regulatory entities or other persons, require extensive clean-up and payments of costs,

fines or damages, and materially and adversely affect our business, financial condition and results of operations.

In addition, and notwithstanding the existence of any insurance, an adverse judgment or settlement in respect of

any claims against us, as well as the negative publicity related to our involvement in any incident, could

adversely affect customers’ perceptions of our safety record, damage our reputation and materially and

adversely affect our business, financial condition and results of operations.

If our costs increase or we encounter unforeseen costs, we may not be able to recover such costs from our

customers

Many of our operating costs and capital expenses for our vessels are unpredictable and may vary based on

events beyond our control. While some unpredictable costs, such as fuel, are passed through to the customer

under our charter contracts, most other unpredictable costs, including increase in prices of materials, supplies

and spare parts, litigation expenses and redeployment expenses, may not be recoverable from our customers,

which could materially and adversely affect our business, financial condition and results of operations.

Competition in the shipping industry could reduce our market share which could materially and adversely

affect our results of operations

Contracts for time charter contracts are generally awarded on a competitive basis. Some important factors

determining whether a contract will be awarded include:

• age, quality and capability of the vessels;

• a vessel operator’s ability to meet the customer’s schedule;

• length of our relationships with customers;

• a vessel operator’s safety record, reliability, efficiency, reputation and experience; and

• price.

We face competition from other local shipping companies in Indonesia. In addition, our key customer,

Pertamina, maintains its own fleet of tankers, and according to Drewry, plans to add up to 69 vessels to its

tanker fleet. In addition, the implementation of the cabotage principles under Indonesian shipping laws, although

limiting international competition, makes domestic investment more attractive, which could increase the level of

competition we face. Our competitors may be better able to compete in making vessels available more quickly

and efficiently, meeting the customer’s schedule and withstanding the effect of declines in daily charter rates

and utilization rates. They may also be better able to weather a downturn in the oil and gas industry. Some of

our competitors may also be willing to accept lower daily charter rates in order to maintain utilization, which

can have a negative impact upon daily charter rates and utilization in our business. Also, our affiliates

(companies owned by our shareholders outside of our group) own vessels, which can be used to compete against

us in the shipping business. Our failure to compete effectively could cause us to lose customers and market

share.

We may not be able to renew our existing time charters when they expire or enter into new time or spot

charters

We cannot assure you that any of our existing time charters will be renewed or that we will be successful

in entering into new time charters on vessels acquired by us; or if renewed or entered into, that they will be at

favorable rates. The time charters for our tankers have expiry dates ranging from the second quarter of 2015 to

the second quarter of 2023. Although many of the time charter contracts contain optional extension periods, we

cannot assure you that such options will be exercised by our customers. If, upon expiration of the existing time

charters, we are unable to obtain time charters or spot charters at desirable rates, this may materially and

adversely affect our business, financial condition and results of operations.

Our time charter contracts contain termination rights in favor of our customers

Nine of our time charter contracts entered into with respect to our vessels are for periods greater than one

year and substantially all have fixed daily charter rates for that term, which were based in part on prevailing

charter rates and expectations for future charter rates and residual values at the time we entered into these

charters. Under our time charters, we are not free to terminate the charters and redeploy the vessels to take

advantage of more profitable charters during the terms of our existing charters. However, our time charter

contracts are based on our customers’ standard form contracts and allow the customer to terminate the charter

term without penalty if we fail to perform our obligations under the contracts. If such termination rights are

exercised, we cannot assure you that we will be able to redeploy the vessels on similar or better charter terms,

which could result in a reduction in our income.

We have and will continue to have a substantial amount of indebtedness which may impose limitations on

our growth

We now have a substantial amount of indebtedness. Our strategy of growth through the optimization and

expansion of our existing fleet and shipyard requires substantial investment and is dependent on our ability to

finance these efforts and other investments out of internal accruals of new capital. The agreements governing

our indebtedness contain restrictions that limit our financial flexibility, including covenants that limit our ability

to take on additional debt or issue additional equity or equity-linked securities and covenants that require us to

maintain certain financial ratios. If our future financial performance fails to meet the expectations of our lenders

and investors, we may not be able to raise the new capital required to fund our growth and we may not be able

to obtain additional financing on satisfactory terms.

Our loan agreements and the loan agreements of our subsidiaries impose operating and financial

restrictions on us and our subsidiaries. These restrictions limit or may limit, if certain ratios are not maintained,

our ability and the ability of our subsidiaries to, among other things:

• incur additional indebtedness;

• dispose of our assets;

• engage in mergers or acquisitions;

• pay dividends;

• sell our vessels; and

• substantially change our business.

A significant portion of our indebtedness is subject to floating interest rates which exposes us to increased

interest expense as interest rates rise. Therefore, we and our subsidiaries may, under certain circumstances, need

to seek permission from lenders in order to engage in some corporate actions. The interests of our lenders and

our subsidiaries’ lenders may be different from our and your interests, and we cannot assure you that we will be

able to obtain lenders’ permission when needed, or at all. This may prevent us or our subsidiaries from taking

actions that are in our, their and/or your best interest.

Our substantial indebtedness and our compliance with the covenants contained in our financing

agreements could also have a material adverse impact on our ability to operate our business in the manner that

our management would otherwise consider most beneficial to our Company and our shareholders. For example,

these covenants could prevent us from making acquisitions of vessels or vessel-owning companies when we

would consider such acquisitions necessary for or beneficial to our business, or they could limit our ability to

make other investments in our fleet or other aspects of our business. These restrictions could materially and

adversely affect our business, financial condition and results of operations.

We may not be able to implement our business strategy successfully or manage our growth

Our future growth and earnings will depend on the successful implementation of our business strategy.

Our ability to achieve our business and financial objectives is subject to a variety of factors, many of which are

beyond our control. A principal focus of our business strategy is to grow by expanding the size of our fleet. Our

future growth will depend upon a number of factors, including our ability to:

• maintain or develop new and existing customer relationships;

• acquire or charter-in vessels at commercially reasonable costs;

• take delivery of, integrate into our fleet and employ any pre-owned vessels we may order or

purchase in the future;

• successfully manage our liquidity and obtain the necessary financing to fund our growth;

• attract, hire, train and retain qualified personnel to manage and operate our fleet;

• identify and consummate desirable acquisitions, joint ventures or strategic alliances; and

• identify and capitalize on opportunities in the Indonesian and international markets.

Further, it is also part of our strategic plans to expand into providing shipyard services in Indonesia in

which we have little or no proven experience, and such an expansion could prove to be unsuccessful.

We intend to acquire one or more vessels. We cannot assure you that we will be able to locate suitable

vessels in the international market that meet the demands of our customers, that such vessels will be available at

the times we require them or that such vessels will be available at commercially reasonable costs. In addition,

we may be unable to obtain financing to acquire vessels. Our failure to acquire suitable vessels at commercially

reasonable costs could result in our losing bids for otherwise profitable charter contracts.

We completed construction of our shipyard located at Tanjung Balai Karimun in 2012 and commenced

shipbuilding activities at our shipyard in 2012. We intend to commence ship maintenance and repair and other

activities in our shipyard after the completion of our floating dry dock, which we expect to commence

operations in the fourth quarter of 2015. Operating our shipyard will require additional capital expenditures,

human resources and know-how. As we only entered into the shipyard business in 2012, our operations in this

sector have been small and our experience limited, and we may not be able to compete with other more

established shipyard services providers on a larger scale. It is difficult to evaluate or predict our ability to

implement our overall expansion strategy successfully. An expansion of our shipping activities through the

acquisition of vessels and diversification of our business into providing shipyard services will require substantial

investment, and if such expansion and diversification is not successful, we will not receive an adequate, or any,

return on our investment. Furthermore, we may decide to alter or discontinue aspects of our business strategy

and may adopt alternative or additional strategies in response to our operating environment or competitive

situation or factors or events beyond our control. These foregoing factors could materially and adversely affect

our business, financial condition and results of operations.

We may not be able to obtain financing to fund our fleet expansion and other activities

Our industry is capital intensive, and we require access to capital to acquire new vessels. To achieve

timely settlement of opportunities to acquire pre-owned vessels, we frequently bridge the acquisition cost with

cash on hand or with loans from our shareholders. We then refinance the vessel with debt capital post-

acquisition, which may increase our debt levels. Depending on future investment plans, we may require

additional financing, which may not be available or, if available, may not be available on favorable terms. In

addition, in the past, some of our bank facilities have been guaranteed by our shareholders and affiliated

companies, and in some cases, our principal shareholders have provided financing to our Company by way of

shareholder loans. We cannot assure you that our shareholders will continue to provide guarantees for our bank

facilities or provide shareholders loans in the future, and this may affect our ability to obtain financing in a

timely manner. Failure to obtain financing on a timely basis or on commercial terms could cause us to forfeit or

forego various opportunities, and failure to obtain financing on attractive terms may result in increased

financing costs and could materially and adversely affect our business, financial condition and results of

operations.

Fluctuations in the market value of our vessels may materially and adversely affect our results of operations

and ability to obtain additional financing or access existing lines of credit

The market value of vessels fluctuates depending upon a number of factors, including general economic

and market conditions affecting the industry, demand for vessel capacity, the number, type, age and size of

vessels in the world fleet, the price of newbuilds (which is affected by availability of shipyard berths and

financing), the level of vessel scrapping, the impact of any port congestion on fleet productivity, the cost of

other modes of transportation and swings in the historically cyclical shipping industry. If we sell a vessel at less

than the vessel’s carrying amount on our consolidated financial statements, this will result in a reduction in our

earnings. For example, in December 2013, we sold one of our vessels and its related equipment for US$9.0

million and recognized an impairment loss of US$3.9 million, being the difference between the sale price and its

net book value.

Certain of our existing lending arrangements contain loan-to-value covenants that could be breached if the

market value of vessels securing such loans falls below a certain threshold. Although such covenants typically

permit us to remedy a decline in the market value of mortgaged vessels by providing additional collateral, our

ability to do so will be limited by the terms of the Indenture. As a result, declining vessel values could require us

to limit or reduce our borrowing under existing loan facilities, which would adversely affect our liquidity. Our

inability to satisfy loan-to-value covenants under our existing lending arrangements could also lead to a breach

of such covenants, which could give rise to events of default under our existing loans.

We are dependent upon the services of key management personnel

Our success depends to a significant extent upon the abilities and collective efforts of our senior

management team and the management teams of our subsidiaries. Our success will depend upon our ability to

retain key members of our respective management teams and hire additional qualified employees. The loss of

any member of our senior management team or the management teams of our subsidiaries could materially and

adversely affect our business, financial condition and results of operations. Difficulty in retaining and hiring

personnel could adversely affect our results of operations. In addition, members of our senior management

teams have established relationships with customers. The loss of any member of our senior management teams

could adversely affect our ability to retain these customers.

We may be unable to attract and retain qualified, skilled employees necessary to operate our business

Our success depends in large part on our ability to attract and retain highly skilled and qualified personnel,

including masters, or captains, for our vessels. If we are unable to hire, train and retain a sufficient number of

qualified employees, it may adversely affect our ability to manage, maintain and grow our business. In addition,

pursuant to cabotage principles under Indonesian shipping laws, our Indonesian-flagged vessels, which comprise 34

of the 35 vessels in our fleet or 98.8% of our aggregate DWT capacity, must be operated by an Indonesian crew. We

require skilled employees who can perform physically demanding work. As a result of the volatility of the oil and

gas industry and the demanding nature of the work, potential employees, especially seafarers, may choose to pursue

employment in fields that offer a more desirable work environment at wage rates that are competitive with ours.

With a reduced pool of workers, it is possible that we will have to expend resources to attract personnel from outside

Indonesia or raise wage rates to attract workers from other fields and to retain our current employees. If we are not

able to attract personnel from outside Indonesia or increase our charter rates to our customers to compensate for

wage-rate increases, this could materially and adversely affect our business, financial condition and results of

operations.

Our costs may increase if our employees are unionized

Currently, none of our employees or the marine crew that operates our vessels are members of any labor

unions. As our fleet and the scale of our shipyard operations grow, our marine crew and land-based employee

requirements will increase. Our plans to increase our shipping and shipyard operations could also accelerate the

organization of our work force into labor unions. If these employees, in particular the marine crew that operates

our vessels, form a labor union or join an established labor union, it could increase our employee costs,

including costs for salaries and costs for benefits, and lead to disruptions in our operations. These factors could

materially and adversely affect our business, financial condition and results of operations.

We rely on our affiliates to provide technical management services, for the chartering-in of vessels used in

our shipping business and for the supply of lube oil

Our affiliates, PT Equator Maritime and PT Vektor Maritim, provide technical management services in

respect of our vessels under our vessel management services agreements. We rely on our affiliates to provide

certain services, including the provision of certification and compliance services and the selection and

employment of marine crew that operate our vessels. Also, we charter-in three vessels from our affiliates under

time charters and charter these vessels to third parties in connection with our shipping business. In addition, we

purchase lube oil from one of our affiliates, PT Rezeki Putra Energi, from time to time. In the years ended

December 31, 2012, 2013 and 2014 and the three months ended March 31, 2014 and 2015, our cost of revenues

paid to PT Rezeki Putra Energi amounted to US$741,492.0, US$763,323.0, US$432,058.0, US$91,010.0,

US$155,198.0. If our affiliates cease to provide technical management services, to charter their vessels to us or

supply lube oil to us, we would have to engage third parties to provide technical management services, charter-

in vessels and/or obtain lube oil from third parties. We cannot assure you that our affiliates will continue to

provide us with technical management services, charter their vessels to us or supply lube oil to us, or that we

will be able to obtain these goods and services from third parties on commercially reasonable terms or at all.

We face the risk of unsatisfactory quality of work performed by our subcontractors

We rely substantially on subcontractors for our labor requirements. Instead of maintaining a large number

of full-time employees, we employ a significant number of subcontract labor and production workers, which we

can increase or decrease to suit our requirements. When the need arises, we outsource certain aspects of our

shipping operations and shipbuilding work scope, such as the provision of marine crew to operate our vessels

and production of certain vessel sub-assemblies and structural sections for our shipyard business, from time to

time, to our subcontractors. These subcontractors may be under-qualified or less skilled as compared to our own

employees or may use poor quality or defective sub-components. In addition, our subcontractors may not report

safety concerns. This may lead to increased costs borne by us, which could materially and adversely affect our

business, financial condition and results of operations and our relationships with our customers. In addition,

with respect to our shipyard business, should our subcontractors default on their contractual obligations or be

unable to complete their work according to specifications on schedule, our ability to deliver the vessels to our

customers in accordance with the quality or timing specifications in the shipbuilding contract may be

compromised, which could materially and adversely affect our business, financial condition and results of

operations.

We may fail to maintain certification by classification societies

The hull and machinery of every merchant vessel must be classed by a classification society authorized by

the vessel’s country of registry. Our two VLCCs travel internationally and are currently classed by Lloyd

Register Asia (“LR”) and DNV GL. The rest of our fleet is currently classed by Nippon Kaiji Kyokai (“NKK”),

American Bureau of Shipping (“ABS”) and Biro Klasifikasi Indonesia (“BKI”), the ship classification society of

Indonesia. A classification society certifies that a vessel is safe and seaworthy in accordance with the applicable

rules and regulations of the vessel’s country of registry and the international conventions to which that country

is a party. Each classification society issues several different certificates for each vessel, including the

Certificate of Class for Hull and Machinery, International Safety Management certificate, International Ship and

Port Facility Security certificate, and the International Labor Organization Maritime Labor Convention

certificate.

A vessel must undergo scheduled surveys, annual surveys, intermediate surveys, dry docking surveys and

special surveys and is sometimes subject to other surveys and inspections that are required pursuant to the

regulations and requirements of the vessel’s country of registry. In lieu of a special survey, a vessel’s machinery

may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-

year period. Our vessels are on special survey cycles for hull inspection and continuous survey cycles for

machinery inspection. Vessels are typically required to undergo special surveys, which include inspection of

underwater parts at least once every five years.

The classification and inspection of our vessels is a prerequisite to our charter contracts. If any vessel does

not maintain her class or fails any annual survey, intermediate survey, dry docking survey, special survey or

other surveys performed by her classification society, that vessel may be unable to trade between ports and will

be unemployable. The failure to maintain a vessel’s class or the failure of a vessel survey could also cause us to

be in violation of our insurance policies, and may allow the insurer to decline coverage. Such inability to trade

between ports or violations of our insurance policies would negatively impact our revenues.

Failure to obtain vetting approval by our customers might adversely affect the employment of our vessels

Vessels, owners, management, personnel, operational procedures and emergency preparedness are

increasingly being subjected to scrutiny or “vetting” by charterers. Concerns for the environment have also led

our clients to develop and implement a strict due diligence process when selecting the vessels and vessel

operators. In addition, we are required to maintain certain insurance policies under the terms of our time charter

contracts, and such insurance policies may not be available on commercially reasonable terms, or at all.

Although Pertamina has not rejected our vessels in the past even though certain of our vessels operating under

time charters for Pertamina fail to meet the vetting criteria for vessels set forth by Pertamina, we cannot assure

you that Pertamina will not reject our vessels in the future.

To pass the vetting process successfully and thereby qualify for business with charterers is a major

challenge and often requires us to incur expenses to ensure that our vessels and procedures are in-line with the

relevant charterers’ vetting protocols. Moreover, our charterers’ vetting procedures generally are becoming

more exacting, which likely may result in additional, future expenses in order for our vessels to pass the

applicable vetting inspections. Failure to obtain vetting approval from one or more of our charterers would have

significant impact on our vessels’ utilization rates, our corporate profile and reputation, and could materially and

adversely affect our business, financial condition and results of operations.

Our shipping business is subject to environmental regulation and compliance and potential liability for

violation could require significant expenditures and adversely affect our business, financial condition and

results of operations

Our shipping operations are subject to extensive laws, treaties and international agreements governing the

management, transportation and discharge of petroleum and hazardous materials, all of which are designed to

protect the environment from pollution, as well as other national, local laws and regulations in force in

Indonesia and the other jurisdictions in which our vessels operate or are registered. Our vessels must also meet

stringent operational, maintenance and structural requirements, and they are subject to rigorous inspections by

governmental authorities. In addition, our personnel must follow approved safety management and emergency

preparedness procedures. Violations of applicable requirements could result in substantial penalties, and in

certain instances, seizure or detention of our vessels.

In order to maintain compliance with existing and future laws, treaties and international agreements, we

incur, and expect to continue to incur, substantial costs in meeting maintenance and inspection requirements,

developing and implementing emergency preparedness procedures, and obtaining insurance coverage or other

required evidence of financial ability sufficient to address pollution incidents. These laws, treaties and

international agreements can:

• impair the economic value of our vessels;

• require a reduction in cargo carrying capacity or other structural or operational changes;

• impose more compliance requirements on our vessels, which may, in turn make our vessels less

attractive to potential charterers or purchasers;

• lead to an increase in the risks to be covered under our insurance policies which may in turn, affect

our ability to secure sufficient insurance coverage for affected vessels; or

• result in the denial of access to, or detention in, certain ports.

Because such laws, treaties and international agreements are often revised, we cannot predict the ultimate

costs of complying with such conventions and legislation or their impact on the resale price or useful life of our

vessels or other aspect of our operations. Additional conventions and legislation may be adopted which could

limit our ability to do business or require us to incur substantial additional costs or could otherwise materially

and adversely affect our business, financial condition and results of operations.

Maritime claimants could arrest our vessels, which could interrupt our cash flow and result in a significant

loss of earnings

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be

entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a

maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. For instance, in

February 2015, one of our VLCCs was arrested in Singapore due to allegations made by one of our suppliers

that we failed to pay US$1.3 million of bunker fees. We were able to successfully conclude negotiations with

that supplier on the day our VLCC was arrested, and our VLCC was released on the same day. We cannot

assure you that we will be able to secure the release of our vessels should any of them be arrested in the future

and any arrest or attachment of one or more of our vessels could result in a significant loss of earnings and cash

flow and/or we may be required to pay large sums of funds to have the arrest lifted.

In addition, international vessel arrest conventions and certain national jurisdictions allow so-called “sister

ship” arrests that allow the arrest of vessels that are within the same legal ownership as the vessel which is

subject to the claim or lien. Certain jurisdictions go further, permitting not only the arrest of vessels within the

same legal ownership, but also any “associated” vessel. In these jurisdictions, an “association” may be

recognized when two vessels are owned by companies controlled by the same party. Consequently, a claim may

be asserted against us, any of our subsidiaries, or our vessels for the liability of one or more of the other vessels

we own, of vessels owned by any of our affiliates. Our affiliates also own certain vessels that we engaged in the

shipping business.

We may suffer an uninsured loss, and we do not maintain general insurance cover protecting against all

shipping related risks or lawsuits we may face

The operation of ocean-going vessels carries an inherent risk of loss caused by adverse weather

conditions, environmental mishaps, fire, mechanical failure, collisions, human error, war, terrorism, piracy,

political action in various countries and other circumstances or events. Any such event may result in loss of life

or property, loss of revenues or increased costs and could result in significant litigation against us.

We seek to maintain a comprehensive insurance coverage at commercially reasonable rates, although

premiums charged by insurance companies tend to fluctuate in response to market events over which we have

no control, and the recent corporate bankruptcies which have resulted in a proliferation of shareholder litigation.

Our insurance policies include protection and indemnity and hull and machinery coverage. We believe that our

current coverage is adequate to protect against most of the accident-related risks involved in conducting our

business. Generally, all of our operational activities are covered by insurance, but we do not maintain general

insurance coverage protecting against all lawsuits brought against us, and we may not be covered for certain

types of claims, depending on their subject matter.

There can be no assurance that all risks are fully insured against, that any particular claim will be fully

paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the

future or at all. If we were to sustain significant losses in the future, our ability to obtain insurance coverage or

coverage at commercially reasonable rates could be materially adversely affected.

Our future contracted revenue may not ultimately be realized

Our remaining contracted revenues were approximately US$236.1 million as of April 30, 2015, assuming

the exercise of all optional extension periods and the performance of mutual obligations under the relevant

contracts. We may not be able to perform under these contracts due to events beyond our control, and our

customers may seek to cancel or renegotiate our contracts for various reasons, including adverse conditions,

resulting in lower earnings. Our time charter contracts may be terminated prior to the completion of the charter

period or our customers may not exercise the optional extension periods. Moreover, some of our vessels are

chartered to provide services to a specific project and a delay in the project commencement or disruption

through unforeseen events may have an adverse impact on our utilization of the contracted vessel and thus on

our financial condition and results of operations. Our inability, or the inability of our customers to perform,

under our or their contractual obligations may materially and adversely affect our business, financial condition

and results of operations.

Our vessels may be exposed to attacks by pirates or terrorist attacks

Some of our vessels operate in international waters and may be attacked, destroyed, hijacked or seized by

pirates, or subject to terrorist attacks, resulting in damage or loss to the vessels which exceeds existing insurance

coverage or which is not covered by the existing insurance policies. Any such event could materially and

adversely affect our business, financial condition and results of operations.

There is risk associated with phasing-out of single-hull oil tankers

Four of the vessels in our fleet are single-hull oil tankers and have a capacity of greater than 5,000 DWT,

which add up to an aggregate capacity of 47,805 DWT, representing 3.6% of the total DWT capacity of our fleet

as of March 31, 2015. The International Maritime Organization (the “IMO”) has prescribed rules relating to the

phasing-out of single-hull oil tankers with a capacity of greater than 5,000 DWT, and this phase-out has been

accelerated to 2010 from 2015, despite protests from a number of nations such as the United States and Japan,

provided that the flag State may permit continued operation for vessels meeting certain requirements.

Notwithstanding rules prescribed by the IMO, Indonesian regulations have permitted continued operation for

single-hull oil tankers of more than 20 years of age if they comply with the conditional assessment scheme

contained in the Ministry of Transportation Regulation regarding Single Hull Oil Tanker No. KM. 66 of 2005

(“KM 66”). Any disaster such as an oil spill may prompt the Government to further accelerate the phase out of

single-hull vessels. Any further acceleration of the phase-out may affect our business and financial condition.

Further, although presently non-mandatory, certain countries may put a restriction for entry of single-hull

vessels on their ports, which may prevent our single-hull vessels from servicing our customers who call at those

ports and may materially and adversely affect our business, financial condition and results of operations.

We cannot assure you that we will be able to compete successfully against our competitors and new entrants

to the shipyard industry

The shipyard business is highly competitive. We face competition from domestic shipyards, as well as

competitors located both in the People’s Republic of China (the “PRC”) and elsewhere in the Southeast Asia

region. We compete on the basis of our ability to fulfill our contractual obligations including the timely delivery

of vessels constructed by us and our ability to dry dock vessels, our yards capacity and capabilities and the price

and quality of the vessels we are able to construct and dry dock. Most of our competitors have more experience

in providing shipyard services and in shipbuilding and many of them have more resources than us and some of

them may have lower costs of operations than we have. In addition, some of our competitors may have

competitive advantages in building and dry docking certain types of vessels compared to us. Our competitors,

particularly those in the PRC, from time to time engage in aggressive pricing in order to gain market share. In

addition, a number of shipbuilding companies currently focus on building different types of vessels than we do.

Although these shipbuilding companies currently do not compete with us, they may possess the capability to

build the types of vessels we build and we cannot assure you that they will not compete with us in the future.

We cannot assure you that we will be able to compete successfully against our competitors, as well as new

entrants in this industry in the future, or that the shipyard companies that are not directly in competition with us

now will not compete with us in the future. Accordingly, if we are unable to maintain our competitive advantage

and compete successfully against our competitors and any new entrants to this industry in the future, this could

materially and adversely affect our business, financial condition and results of operations.

We cannot assure you that our floating dry dock will become operational as scheduled or operate as

efficiently as planned

We are currently constructing a 50,000 DWT floating dock which is key to our proposed ship repair and

maintenance activities at our shipyard. Currently, we expect the floating dock to commence operations in the

fourth quarter of 2015. However, we cannot assure you that the construction of the floating dock will be

completed as scheduled, or will become operational as soon or operate as efficiently as planned. If there are

delays in the construction of the floating dock, problems with the facilities on it or for other reasons, the floating

dock does not function as efficiently as intended, or our utilization of the floating dock is not optimal, we may

not be able to expand our shipyard operations and also commence the servicing and dry docking of our own

vessels at our own facilities or service third parties as planned, and this could materially and adversely affect our

business, financial condition and results of operations. Failure to complete our dry dock as scheduled or

inefficient operation could materially and adversely affect our business, financial condition and results of

operations.

We could incur losses under our fixed price contracts as a result of cost overruns, delays in delivery or

failures to meet contract specifications

All of our current shipbuilding contracts are fixed-price contracts and we entered into these contracts up to

three years prior to the scheduled delivery of the respective vessel. We attempt to forecast costs of labor and raw

materials when we enter into our fixed-price contracts and retain all cost savings on completed contracts, but we

are liable for the full amount of all cost overruns. The actual costs incurred and profits we realize on a fixed-

price contract may vary from our estimates due to factors such as:

• unanticipated variations in labor and equipment productivity over the term of a contract;

• unanticipated increases in labor, raw material, subcontracting and overhead costs, including as a

result of bad weather; and

• delivery delays and corrective measures for poor workmanship.

Depending on the size of the project, variations from estimated contract performance could significantly

reduce our earnings, and could result in losses, during any fiscal quarter or year. All of our fixed price contracts

provide for liquidated damages for late delivery. We cannot assure you that these contracts, if secured, can be

completed profitably. Significant cost overruns on our fixed price contracts could materially and adversely

affect our business, financial condition and results of operations.

We do not have certificates for most of the land for our shipyard

We have not obtained HGB certificates of title for approximately 80% of the total land area of our

shipyard, including land on which we currently operate our shipyard business and the land available to expand

our shipyard business. A portion of such land is subject to further registration in order to obtain HGB certificate

of title from the relevant land office. Currently, our possession of such land is based on either (i) a long term

lease from the regional government; (ii) an ongoing reclamation process pursuant to a reclamation license

granted to us by the Government; or (iii) acquisition from local residents of the lands by entering into certain

agreements with the owners or occupants to transfer the rights or ownership over the land to us or Hartono

Utomo, one of our Directors. Although we intend to obtain the HGB certificates issued in the name of our

Company for all such land in order to develop the shipyard operations, we cannot assure you that we will obtain

or perfect the relevant title to such land in a timely manner or at all or ownership of the land will be duly

transferred to us, or that we will acquire valid title to the land, even though we have made payments for the

relevant land. Failure to do so would have a material and adverse effect on our business, financial condition and

results of operations.

Our shipbuilding business is exposed to the risk of increases in the price of our raw materials

The major components of our cost of sales include raw materials such as steel and other materials,

equipment and other components such as pumps, propellers and engines. In the periods after we commenced our

shipyard operations, for the years ended December 31, 2013 and 2014 and the three months ended

March 31, 2015, our raw material costs constituted 75.4%, 53.4% and 81.9% of our cost of sales for our

shipyard business, respectively. In particular, for the same periods, steel purchases accounted for 66.3%, 22.0%

and 16.0% of our cost of sales, respectively.

Shortages in the supply of the raw materials we use in our shipyard business may result in an increase in

the price of these raw materials. In addition, the cost of many of the raw materials we use, such as steel, may

fluctuate in line with any changes in their global supply and demand. In the event that our raw materials increase

in price, we will not be able to pass these price increases to our customers on our existing contracts, which could

materially and adversely affect our business, financial condition and results of operations.

We may be unable to attract and retain sufficient skilled and/or qualified personnel for our shipyard business

Competition for skilled shipyard labor in Indonesia is intense. Our competitors may also be expanding

their operations and may require additional workers. As a result, we may from time to time, experience

difficulties in attracting and retaining highly skilled employees. Our shipbuilding operations require highly

skilled and qualified personnel, such as engineers. For example, our engineers in our design and technical

department are instrumental in analyzing the design blueprints of new vessels and play a central role in

designing the production process. They also play a critical role in our cost management system, as we are

dependent on them to formulate production design plans that will allow for the efficient utilization of our raw

materials. Personnel for our shipyard is engaged separately from personnel for our shipping business. Our

inability to maintain a sufficient number of skilled and qualified personnel to handle the more sophisticated and

technology-intensive shipbuilding or dry docking processes, or us having to pay substantially higher salaries to

procure these personnel, could materially and adversely affect our business, financial condition and results of

operations.

Labor shortages could increase the cost of labor and hinder our productivity and ability to complete the

construction of our vessels on time, which would materially and adversely affect our business, financial

condition and results of operations.

Further, we utilize subcontract labor and production workers in our shipyard on a regular basis. In the

event that we are unable to secure adequately skilled subcontract labor and production workers or if the costs for

such services increase, this could materially and adversely affect our business, financial condition and results of

operations.

Our future growth and expansion of our shipyard is limited by our production capacities and the location at

which we operate

Our shipbuilding capacity is limited by, among other things, the size of our shipyard, the number, size and

capacities of our slipways, berths, docks and our plant and equipment. In addition, the size and capacity of the

vessels we dry dock is limited by the locations at which we operate. After completion of our floating dry dock,

we will have the capacity to service vessels of up to 50,000 DWT of capacity. We would not be able to take

maintenance or repair orders for vessels of greater than 50,000 DWT, and, as a result, we may have to refuse

maintenance or repair order for vessels larger than 50,000 DWT of capacity. In the event that we are unable to

increase our production capabilities to enable us to construct such vessels, we may lose business opportunities

and this could materially and adversely affect our business, financial condition and results of operations.

The first phase of our shipyard has a total land area we estimate is approximately 50 hectares, with an

additional land area of approximately 168 hectares available for expansion. We hold the land comprising our

current shipyard and land available for expansion under various land interests. We will have to incur substantial

capital investments, expenditure and time to expand our production capacities by expanding the size of our

shipyard in line with our plans for future phases of our shipyard. We cannot assure you that we will be able to

secure appropriate and suitable financing for such an expansion. Accordingly, we cannot assure you that we will

be able to manage the future expansion of our production capacities effectively. Any failure on our part to do so

would materially and adversely affect our business, financial condition and results of operations.

We may not be able to meet our construction schedules and may face delays in the delivery of vessels to our

customers

We are dependent on our suppliers for the timely delivery of raw materials, equipment and components

such as pumps, propellers and engines. When the need arises, we outsource certain aspects of our shipbuilding

work scope, such as the production of certain vessel sub-assemblies and structural sections, from time to time, to

our subcontractors. We also rely heavily on the importation of marine equipment and other shipbuilding-related

components that are not manufactured domestically. We are dependent on the timely completion of

subcontracted works by our subcontractors when we use their services. We may encounter situations where we

are unable to deliver our vessels on a timely basis due to, among other reasons, late or lack of delivery of raw

materials from our suppliers or late completion of subcontracted works by our subcontractors. In addition, we

are also dependent on subcontract labor and production workers for the construction of our vessels. In the event

that we fall behind schedule in the delivery of our vessels, we may not have the requisite buffer in our

production capacity or sufficient subcontractors to react to any contingencies that may arise in constructing and

delivering our existing orders. If we are unable to source such raw materials, equipment and components from

alternative suppliers on a timely basis, our production schedule may be delayed, thereby delaying the delivery of

the vessel to our customers. In addition, our profitability may also be adversely affected if we are unable to

secure alternative sources of such raw materials, equipment and components in a cost efficient manner or if we

are unable to recover liquidated damages from the defaulting suppliers.

Our shipyard operations are subject to risks including, inter alia, the breakdown, failure or sub-standard

performance of machinery, natural disasters like floods, long periods of adverse weather, social unrest and

strikes, which may result in operational disruptions. Any material operational disruptions will adversely affect

our ability to meet our construction schedules and cause delays in the delivery of vessels to our customers.

Any substantial delay in the completion and delivery of the vessels under our shipbuilding contracts may

result in us being liable to pay our customers damages, liquidated or otherwise. If the delay continues beyond

the time stipulated in the contracts, our customers may rescind their shipbuilding contracts with us. Any delay

will have an impact on our reputation and could materially and adversely affect our business, financial condition

and results of operations.

We may face claims and incur additional rectification costs for defects and warranties in respect of our

vessels

We may face claims by our customers in respect of defects, poor workmanship or non-conformity to our

customers’ specifications in respect of vessels built by us. We typically extend a warranty period of 12 months

to our customers for new vessels. Due to the length of the warranty period extended by us, we may be subject to

claims from our customers and we may incur additional costs if rectification work is required in order for us to

satisfy our obligations during the warranty period. We are also required to provide a warranty bond in an

amount equal to 3.0% of the contract price to cover rectification work for 12 months after delivery and the

acceptance of the vessel by our customer. We cannot guarantee you that these warranty provisions will be

sufficient to cover the costs incurred for defects. If the costs of any rectification works exceed the warranty

bonds we have made, this could materially and adversely affect our business, financial condition and results of

operations.

Shipbuilding exposes us to potential liabilities that may not be covered by insurance

Our shipbuilding operations are subject to inherent risks such as equipment defects, malfunctions and

failures, equipment misuse and natural disasters that can result in uncontrollable flow of gas or well fluids, fires

and explosions. Although we maintain insurance on our vessels for fire, catastrophe, work-related injury and

material failure, we do not have insurance for business interruption. Substantial portions of our activities involve

the fabrication and refurbishment of large steel structures, the operation of cranes and other heavy machinery

and other operating hazards. These risks could expose us to substantial liability for personal injury, wrongful

death, product liability, property damage, pollution and other environmental damages. Although we have

obtained insurance for our employees as required by Indonesia laws and regulations, as well as our shipyard

properties and assets, our insurance may not be adequate to cover all potential liabilities. Further, we cannot

assure you that insurance will be generally available in the future or, if available, that the premiums will not

increase or remain commercially justifiable. If we incur substantial liability and the insurance does not or is

insufficient to cover the damages, this could materially and adversely affect our business, financial condition

and results of operations.

We will not be able to secure new contracts if we are unable to issue the requisite refund guarantees as

required under our shipbuilding contracts

The shipbuilding industry is a capital-intensive industry, and, as the contract prices under our shipbuilding

contracts are generally high, we are typically required to furnish our customers with refund guarantees as

security for the fulfillment of our contractual obligations under our shipbuilding contracts until the completed

vessel is delivered to the customer.

In order for us to secure refund guarantees, banks and financial institutions review, among other things,

our financial standing and creditworthiness. Generally, we arrange for banks to issue refund guarantees to our

customers from our available banking facilities. We cannot assure you that we will continue to be able to

arrange for refund guarantees in this manner. In the event that we are unable to do so and we are unable to

satisfy the financial requirements prescribed by our banks and financial institutions, we will not be able to

procure the requisite refund guarantees and as a result, we may be unable to secure new contracts, which would

materially and adversely affect our business, financial condition and results of operations.

If our customers terminate their shipbuilding contracts or if we experience a total loss of our vessels under

construction, our customers can enforce on our refund guarantees, which could materially and adversely

affect our net revenues and profits

Our customers retain the right to change or terminate their shipbuilding contracts upon the occurrence of

certain events, including, if we experience a total loss of the vessel under construction. In the event of a

termination of a shipbuilding contract other than due to the fault of the customer, the customer would be entitled

to enforce the refund guarantee, which we have provided as a security in respect of our shipbuilding contract.

The enforcement of a refund guarantee would result in us incurring significant liability to the bank providing the

refund guarantee. To date, none of our shipbuilding contracts has been terminated, and our refund guarantees

have not been enforced upon. However, any termination of a significant contract or enforcement of a refund

guarantee would materially and adversely affect our business, financial condition and results of operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is based upon information contained in our financial statements,

including the notes thereto, appearing elsewhere in this Updates. You should read the following discussion and

analysis in conjunction with our financial statements, including the notes thereto. This discussion contains

forward-looking statements that reflect our current views with respect to future events and financial

performance. Our actual results may differ materially from those anticipated in these forward-looking

statements as a result of factors, such as those set forth under “Risk Factors” and elsewhere in this Updates.

Our consolidated financial statements have been prepared in accordance with Indonesian FAS. Indonesian FAS

differ in certain significant respects from IFRS.

Overview

We are the largest independent tanker owner and operator in Indonesia in terms of DWT capacity, as of

March 31, 2015, according to Drewry, providing crude oil, petroleum products and LPG shipping services and

shipyard services principally to companies operating in the domestic oil and gas and chemical sectors. As of

March 31, 2015, we owned and operated a total of 35 vessels, of which 34 were Indonesian-flagged tankers,

including 18 oil tankers, of which two are the only Indonesian flagged VLCCs in the market, 12 chemical

tankers, three gas tankers and two FSO tankers, with a total carrying capacity of 1.3 million DWT. We also own

a shipyard the first phase of which comprises a total land area we estimate is approximately 50 hectares and has

a coast line of 1.3 kilometers. Our shipyard commenced providing shipbuilding services in 2012. We also intend

to offer ship repair and maintenance services to third parties and to our own vessels after the completion of our

floating dry dock.

Our business benefits from cabotage principles under the Indonesian shipping law that mandate the use of

Indonesian-flagged vessels for domestic sea freight transportation, particularly to support the national oil and

gas downstream industry in the seaborne distribution of crude oil, petroleum products and LPG around the more

than 13,000 islands that comprise the Indonesian archipelago. As of March 31, 2015, our 34 Indonesian-flagged

tankers had a total carrying capacity of 1.28 million DWT and our two VLCCs currently transport crude oil

from Middle East producers for processing at Pertamina refineries in Indonesia.

We operate two principal lines of business, namely shipping services and shipyard services. Our shipping

business is divided into two main segments based on the contract arrangements under which our vessels are

chartered to customers, namely time charters and spot charters.

Under time charter contracts, our vessels are chartered to customers for fixed periods of time at a fixed

charter fee, which is calculated per day. Time charter services include our vessel operational crews, along with

all maintenance services, supplies, spare parts, crew meals and other operational services. The chartering party

remains directly responsible for other voyage costs, which primarily comprise bunker and port charges and

duties. Our time charters typically have an original lease term of between three months and ten years with one or

more extension periods exercisable at the option of the customer, depending on the particular demands of the

customer. As of April 30, 2015, our remaining contracted revenues for time charters amounted to

US$236.1 million, of which US$92.2 million relates to revenues from optional extension periods, and our time

charter contracts had a weighted average remaining life of 5.6 years weighted by contract value, including

optional extension periods. Under spot charter contracts, our vessels are chartered to customers for a single

voyage that is priced on a current or “spot” market rate. Similar to time charters, spot charter services include

our vessel operational crews, along with all maintenance services, supplies, spare parts, crew meals and other

operational services. Our spot charter customers pay a single charter fee, while we bear the expenses for the

crew, bunker and port charges and other operating costs.

In 2012, we commenced new shipbuilding operations at our shipyard located in a Free Trade Zone in

Karimun, Indonesia, in the Malacca Straits, an international shipping route, and nearby Singapore, which has a

developed maritime industry. Our shipyard is fronted by a 1.3 kilometer coast line and has a coastal depth of

12 meters and provides shipbuilding and docking services for vessels of various carrying capacities. We

currently have an orderbook of five new ships under construction, with completion and deliveries scheduled to

occur between late-2015 and 2017. We also have a 50,000 DWT floating dry dock scheduled to complete

construction and commence operation in the fourth quarter of 2015, from which we expect to provided ship

repair and maintenance services for our fleet and other vessels. We believe that the Free Trade Zone provides

our shipyard with advantages on the import of materials and spare parts, including tax-free status and expedited

customs clearance, which will allow us to compete effectively on cost and timing of shipbuilding, maintenance

and repair services.

Recent Developments

Our subsidiary, SPU, a non-guarantor restricted subsidiary, entered into an agreement with DBS on

April 23, 2015 for a term loan in a maximum amount of US$14.7 million for the purpose of fully financing the

acquisition of our vessel, KM Fortune Pacific XLIX and to partially finance the acquisition of our vessel,

KM Success Dalia XLVIII. The facility is subject to interest at a rate of one month LIBOR plus a margin of

3.75% per annum. The final maturity date of the loan is May 22, 2020. We are subject to certain negative

covenants and financial covenants in connection with the DBS facility.

Factors Affecting our Business and Results of Operations

Our results of operations are affected principally by the overall market conditions in the crude oil,

petroleum products and LPG shipping industry and other factors, including:

• Indonesian demand for crude oil, petroleum products and LPG;

• charter rates;

• our fleet size and ability to expand our fleet;

• our mix of time and spot charters;

• utilization rates of our vessels;

• our ability to manage our costs;

• Indonesian cabotage laws and competition;

• foreign exchange fluctuations; and

• access to and cost of financing.

Indonesian demand for crude oil, petroleum products and LPG

As Indonesia is an archipelago comprised of more than 13,000 islands, where the bulk of crude oil,

petroleum products and LPG are transported to various points of consumption by sea, the demand for crude oil,

petroleum products and LPG within Indonesia have had and are expected to continue to have a significant

impact on demand for shipping services, including international shipping services for the importation of crude

oil for refining within Indonesia and domestic shipping services for the transportation of refined oil products for

domestic consumption, and shipyard services and, consequently, on our results of operations.

Crude oil, petroleum products and LPG are Indonesia’s biggest energy sources and Indonesian domestic

demand for them have been growing over the recent years. A consistent growth in Indonesia’s economy in the

past decade has been followed by commensurate growth in Indonesia’s energy consumption. According to

Drewry, Indonesia’s energy consumption has grown at a CAGR of 4.3% in the last five years from 877 million

barrels of oil equivalent in 2007 to 1,079 million barrels of oil equivalent in 2012. The volume of fuel oil that

was transported domestically has also increased from 61.6 million tons in 2010 to 72.0 million tons in 2013,

representing a CAGR of 5.3%.

We provide crude oil, petroleum products and LPG shipping services and shipyard services, principally to

companies operating in the domestic oil and chemical sector in Indonesiaand expect increases in domestic

demand for such products to result in increases in demand for shipping services for both domestic and

international routes, which mainly involve the import of crude oil to refineries in Indonesia. We have worked

closely with Pertamina, the state-owned oil company operating nine refineries around Indonesia and which

accounts for a substantial amount of oil and chemical products produced and shipped within Indonesia, for 35

years and are currently the largest provider of oil and gas and chemical shipping services to Pertamina.

Pertamina is our largest customer and our vessels chartered to Pertamina are principally engaged in time

charters. For the years ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015,

respectively, shipping services provided to Pertamina accounted for 68.2%, 46.3%, 52.4% and 53.2% of our net

revenues. Therefore, our results of operations are in particular significantly affected by demand for shipping

services from Pertamina.

We also provide shipyard services for the construction of newbuilds and the repair and maintenance of

ships. Although we currently only provide shipbuilding services at our shipyard, where we construct newbuilds

for customers who satisfy a portion of their shipping needs with their own vessels, we are constructing a

50,000 DWT floating dry dock that is scheduled to commence operations in the fourth quarter of 2015, from

which we expect to provide ship repair and maintenance services for our fleet and other vessels.

Charter rates

For the years ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2014 and

2015, our net revenues from shipping services were approximately US$71.0 million, US$102.5 million,

US$107.4 million, US$23.9 million and US$27.6 million, or 99.4%, 96.3%, 84.2%, 91.1% and 81.4% of our

total net revenues, respectively. Charter rates have a direct and substantial effect on our revenues from shipping

services. Our charter rates are driven largely by the type of products our customers wish to transport, the type of

vessel they require and the availability of Indonesian flagged vessels, liquid bulk cargo demand for a particular

product and charter type.

As a result of Indonesian cabotage laws and the limitation on foreign investment in Indonesian shipping

companies, competition from foreign shipping companies is limited and there has been an increase in the

number of Indonesian-flagged vessels and a decrease in foreign-flagged vessels operating in Indonesian waters.

According to Drewry, between 2006 and 2013, the number of Indonesian-flagged vessels increased at a CAGR

of 10.7% with the number rising from 6,428 to 13,120 and DWT capacity increasing from 2.9 million DWT to

8.2 million DWT. The volume of fuel oil that was transported domestically has also increased from 61.6 million

tons in 2010 to 72.0 million tons in 2013, representing a CAGR of 5.3%. As there are a limited number of

domestic shipping companies with the resources to grow their fleet size to meet local demand for shipping

services, the number of Indonesian flagged vessels has grown at a relatively slow pace. At the same time, large

scale vessel charterers like Pertamina, our major customer, determine the charter rates they are willing to pay

based on, among other things, prevailing market rates, the charter rates from previous contracts, the investment

required if it were to use its own fleet and its internal budget. We believe that the limited competition faced by

Indonesian shipping companies, the relatively slow growth in the number of Indonesian flagged vessels and the

ability of large scale vessel charterers to influence the charter rates charged by tanker owners and operators have

resulted in relatively stable Indonesian time charter rates as compared to international time charter rates. Our

charter rates also differ depending on the type of charter agreement entered into between us and our customers

as charter rates differ between the spot and time charter markets.

A significant portion of our shipping revenues are from time charter agreements for periods greater than

one year, with charter rates for the period of the charter agreed at the time of entering into the charter. As a

result, fluctuations in market prices during the term of the charter will not affect our income from these vessels

during the period of the charter, although we will similarly not benefit from any increase in hire rates in the

charter market. Our charter rates thus reflect, among other things, the prevailing market forces and expectations

of future charter rates at the time of entry into the relevant charter agreement. When a charter expires, the new

charter rate we obtain depends on the hire rates achievable at the time of the new charter.

Our customers producing oil products generally charter our oil tankers under time charter contracts in

order to ensure a steady distribution to meet consistent demand of their gasoline, diesel and jet fuel around the

Indonesian archipelago, while our customers producing chemical products have less consistent demand for their

products, and therefore tend to charter our smaller vessels under spot charter contracts. According to Drewry,

time and spot charter rates have risen across all the main Indonesian VLCC routes since December 2013 as a

result of strong demand growth and only moderate increases in vessel supply. Time charter rates for other types

of oil tankers have also increased significantly since December 2013 as the increased demand for oil and DWT

capacity for the storage of oil in Indonesia have used up some of the overcapacity in the industry from the

preceding years.

Fleet size and DWT capacity and acquisition of pre-owned vessels

As of March 31, 2015, our fleet was comprised of 35 vessels, of which 34 were Indonesian-flagged

tankers, including 18 oil tankers, of which two are the only Indonesian-flagged VLCCs in the market, 12

chemical tankers, three gas tankers and two FSO tankers, with a total carrying capacity of 1.3 million DWT. The

size of our fleet affects our results of operations, in particular, our revenues, by increasing or decreasing the

number of days our vessels are available for charter, and our depreciation and financing expenses. We believe

that our strategy to purchase pre-owned vessels in the international markets and re-flag these vessels to comply

with Indonesian cabotage rules allows us to enhance our return on investment and operating margins on these

vessels.

As demand for shipping services in Indonesia has continued to grow, we have sought to increase the

number of vessels and the total DWT capacity of our fleet through the acquisition of well-constructed and

maintained pre-owned vessels, principally from the European market, which we then re-flag to become

Indonesian-flagged vessels. To achieve timely settlement of opportunities to acquire pre-owned vessels, we

frequently bridge the acquisition cost with cash on hand and then refinance the vessel with debt capital post-

acquisition. The price of pre-owned vessels in the international markets is linked to international time charter

rates, with vessel prices increasing and decreasing in tandem with charter rates. Indonesian time charter rates,

however, are relatively stable and less likely to fluctuate when compared to international time charter rates. As a

result, increases in international time charter rates may have the effect of increasing our cost to acquire pre-

owned vessels in the international markets, and as such we may not receive the benefit of a corresponding

increase in shipping revenues earned on time charter rates in the Indonesian market, which may have the effect

of lowering our return on investment in these pre-owned vessels. Our steady revenues under time charter

contracts with Pertamina and other customers are partially offset by the higher capital expenditures and other

costs (including costs associated with chartered-in vessels to replace our vessels on time charter contracts during

periods of repair and maintenance) that increase with the age of the vessel.

Mix of spot and time charters

As charter rates and vessel operating costs differ between the spot and time charter markets, our revenues,

operating margins and results of operations are affected by the mix of our vessel charters between spot charters

and time charters.

Spot charters are priced at a current or “spot” market rate. The customer pays a flat spot fee for the charter

and our spot fee includes our estimated voyage expenses, including bunker costs and duties and port charges,

which we seek to pass on to our customers. As such, we generally derive higher revenues per day for a

particular vessel from spot charter contracts, although our operating margins for spot charter contracts may be

lower due to higher vessel operating costs associated with spot contracts. Under time charter contracts, vessels

are chartered to customers for fixed periods of time at a fixed charter fee. Unlike spot charter arrangements, the

chartering party remains directly responsible for voyage costs, such as bunker costs and duties and port charges,

and our time charter fees are comparatively lower than our spot charter fee to account for such a difference. As

such, we generally derive lower revenues per day for a particular vessel from time charter contracts, although

our operating margins for time charter contracts may be higher due to lower vessel operating costs associated

with time charter contracts.

Historically, our customers have generally chartered our oil tankers through time charters for the

transportation of crude oil and smaller vessels through spot charters for the transportation of petroleum chemical

products. In an effort to satisfy our customers’ needs for a range of vessels and, at the same time, maximize our

revenues while ensuring stable cash flows, we manage the deployment of our vessels between the time and spot

charter markets. Our vessel deployment strategy is designed to provide stable cash flow through the use of time

charters for a significant portion of our fleet, while maintaining the flexibility to benefit opportunistically from

spot market charter rate improvements.

We typically place our oil tankers in the time charter market, spot chartering them when they are in

between time charter contracts. We place a number of our relatively smaller vessels, such as chemical tankers

and gas tankers, in the spot charter market to be able to meet customer demand and also to be able to benefit

from increases in spot market charter rates. The proportion of our fleet, and therefore our shipping revenues,

under spot and time charters varies from period to period due to a number of factors, including, in particular, the

prevailing spot and time charter rates for vessels, changes in customer demand between spot and time charters,

and the type and number of vessels disposed and acquired during the period. For the years ended December 31,

2012, 2013 and 2014, and the three months ended March 31, 2015, respectively, 73.9%, 58.0%, 51.2% and

59.2% of our net revenues were derived from time charters, and 25.5%, 38.3%, 33.0% and 22.2% of our net

revenues were derived from spot charters.

Utilization rates

Our revenues are also affected by the utilization rate of our vessels. Utilization rate for a vessel is

calculated by dividing the total number of days in a given period for which the vessel earns a daily charter rate

divided by the total number of days such a vessel is available. A vessel is considered available for the days the

vessel was in our fleet in a period. We do not consider a vessel to be in our fleet if either it has been recently

acquired and is in preparation for deployment or if the vessel is no longer under charter and has been designated

for sale. Assuming that our vessels have been chartered, the fewer days our vessels spend in dry-dock, the

higher our revenues, although ensuring proper vessel maintenance requires a certain amount of off-hire time,

which should reduce down-time of vessels in the future and prolong their useful life. The utilization rate of our

vessels is affected by numerous factors, including charter rates, size and composition of our fleet, tenor of

charters, ability to redeploy vessels upon charter expiration and operational efficiency of our fleet. We have

experienced a stable rate of option extensions and renewals of our time charter contracts, as, in our experience,

our customers prefer to continue the use of incumbent vessels rather than locate and contract a time charter with

a new vessel. For the years ended December 31, 2012, 2013 and 2014, and three months ended March 31, 2015,

our fleet-wide utilization rates were 95.9%, 98.1%, 88.1% and 89.2%, respectively.

Costs

Our operational efficiency and ability to manage operating costs affects our profitability and our results of

operations. Our costs consist primarily of vessel operational expenses, shipbuilding expenses, depreciation,

employee salaries and expenses, vessel rental expenses, docking expenses, insurance and management fees

associated with vessel operation.

Vessel operational expenses, which include voyage expenses, crew-related expenses, vessel rental

expenses, and repair and maintenance costs, have historically been the largest component of our costs for both

our spot and time charter businesses. Voyage expenses, repair and maintenance costs and vessel rental expenses

have historically been the most significant components of our vessel operational expenses, and we expect our

ability to manage and limit such expenses to have a significant impact on our profitability and results of

operations.

In accordance with industry practice, we are responsible for voyage expenses, including bunker fuel costs,

when operating our vessels on the spot market; when we charter out as time charters, we do not pay for voyage

expenses, as the customer pays for voyage expenses directly. Fuel oil, or bunker fuel, costs are one of our

principal items of voyage expenses for our spot charter business. For the years ended December 31, 2012, 2013

and 2014 and the three months ended March 31, 2015, bunker fuel costs comprised 16.3%, 26.9%, 22.7% and

12.0%, respectively, of our costs of revenues. Bunker fuel is consumed to propel and maneuver our vessels and

for the operation of various equipment on board each vessel ranging from cargo operation to cooking. Bunker

fuel prices typically, but not necessarily, follow crude oil prices and generally experience significant

fluctuations depending on various factors, including supply and demand for oil and gas, geopolitical

developments and developments in oil production including actions by OPEC. In recent years, the prices for

bunker fuel have been volatile. Further, the impact of bunker fuel prices on our results of operations are also

affected by any regional price differences within the bunker fuel market. Fluctuations in the price of bunker fuel

are expected to have a substantial impact on our operating costs, profitability and results of operations.

Our vessels require repair and maintenance periodically due to regular wear and tear of operating parts of

the vessels. We continually seek to acquire well-constructed and maintained pre-owned tankers so as to

minimize our costs of having to repair and maintain our vessels. Unscheduled dry docking of our vessels for

repairs, not only increases our costs to repair and maintain our vessels, it also decreases our vessel utilization

rates and increases our vessel rental expenses, if we are required to replace the dry docked vessel for a customer.

Unanticipated repair and maintenance costs also have a substantial impact on our operating costs, profitability

and results of operations.

We incur vessel rental expenses when we charter-in vessels to replace vessels that have been chartered

when they require repair and maintenance or to charter them out to our customers when we do not have

sufficient vessels in our fleet to meet customer demand. For both spot and time charters, our costs include rental

we pay to the owners of the vessels. For vessels that we charter-in on a time-charter basis, the owner of the

vessels also bear the ship operating expenses.

Indonesian cabotage laws and competition

As a result of Indonesian cabotage laws, which were part of the Government’s efforts to support domestic

shipping companies, and the limitation on foreign investment in Indonesian shipping companies, competition

from foreign shipping companies is limited, and we benefit from our position as one of the few domestically-

owned shipping providers in Indonesia capable of servicing the oil and gas industry with a fleet nearly entirely

comprised of Indonesian-flagged vessels. Although we face competition from a number of Indonesian shipping

companies for vessel charters in domestic Indonesian waters, we believe our fleet differs from our competitors,

which has allowed us to serve our customers’ needs and maintain a stable utilization rate of our vessels and a

high rate of renewal of our time charters. We believe that our existing time charters will continue their track

record of renewal, as our vessels have proven well-suited for the needs of the charterers, and the substitution of

our time chartered vessel with a competitor’s vessel can be costly and time consuming. The size of our fleet has

grown steadily in the years following the implementation of Indonesian cabotage laws.

Foreign exchange fluctuations

Fluctuating foreign exchange rates, in particular fluctuations in the U.S. dollar/Rupiah exchange rate can

have a material effect on our results of operations. We generate most of our revenue in and our functional

currency is U.S. dollars. The majority of our vessel charter contracts and all of our shipbuilding contracts are

denominated in U.S. dollars. For the years ended December 31, 2012, 2013 and 2014 and the three months

ended March 31, 2014 and 2015, approximately 35%, 31%, 26%, 20% and 41%, respectively, of our cost of

revenues were in Rupiah with the remainder in U.S. dollars or other currencies. As such, an appreciation in the

value of the U.S. dollar against the Rupiah will have a positive impact on our results of operations, while a

depreciation in the value of the U.S. dollar against the Rupiah will have an opposite effect. For instance, our

gain on foreign exchange — net increased to US$14.6 million in the year ended December 31, 2013 from

US$3.5 million in year ended December 31, 2012, mainly attributable to a greater appreciation of the U.S. dollar

against the Rupiah in 2013 as compared to 2012. As the U.S. dollar has strengthened against the Rupiah over the

recent years and we expect such a trend to continue, we currently do not hedge our exposure to foreign currency

risk with respect to the U.S. dollar/Rupiah exchange rate.

Significant Accounting Policies

Our consolidated financial statements have been prepared in accordance with Indonesian FAS, which

comprise the Statements and Interpretations issued by the Financial Accounting Standards Board of the

Indonesian Institute of Accountants (“PSAK”) and the Regulations and the Guidelines on Financial Statement

Presentation and Disclosures issued by OJK. The preparation of these consolidated financial statements requires

management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and

expenses as well as the disclosure of contingent liabilities. Management bases its estimates and judgments on

historical experience and other factors that are believed to be reasonable under the circumstances. We

continually evaluate such estimates and judgments. Actual results may differ from these estimates under

different assumptions or actual conditions. In order to provide an understanding of how our management forms

their judgment about future events, including the variables and assumptions underlying our estimates, and the

sensitivity of judgments to different circumstances, we have identified the critical accounting policies discussed

below. For more details, see Notes 2 and 3 to our consolidated financial statements included in this Updates for

the Summary of Significant Accounting Policies and Source of Estimation Uncertainty.

Revenues and Expenses Recognition

Revenue from charter services is recognized to the extent that it is probable that the economic benefits

will flow to our Company and the revenue can be reliably measured. Revenue is measured at the fair value of

the consideration received. Time charter revenue is recognized proportionally over the period covered in

accordance with the contract. Spot charter revenue is based on spot and is recognized when the services are

rendered to customers.

Revenue from construction contract is recognized using the percentage-of-completion method, measured

by percentage of work completed to date as estimated by engineers and approved by the project owner. At

reporting dates, earnings in excess of billings on construction contracts are presented as current assets, while

billings in excess of estimated earnings are presented as current liability. Where the outcome of a construction

contract cannot be reliably estimated, contract revenue is recognized to the extent of contract costs incurred that

is probable to be recoverable. Contract costs are recognized as expenses in the period they are incurred. When it

is probable that the total contract costs will exceed total contract revenue, the expected loss is recognized as an

expense immediately. Cost of contracts include all direct materials, labor and other indirect costs related to the

performance of the contracts.

Revenue earned but not yet billed to customers is recorded as “Unbilled Revenues” in the consolidated

statements of financial position.

Depreciation

Our Company has chosen the cost model as a measurement of our fixed-assets accounting policy. Fixed

assets are stated at cost less accumulated depreciation and impairment losses, if any. Such cost includes the cost

of replacing part of the fixed assets when that cost is incurred, if the recognition criteria are met. Likewise, when

a major inspection is performed, its cost is recognized in the carrying amount of the fixed assets as a

replacement if the recognition criteria are satisfied. All other repairs and maintenance costs that do not meet the

recognition criteria are charged directly in the consolidated statements of comprehensive income as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets as

follows:

Years

Buildings ........................................................................................................................................ 20 Vessels ........................................................................................................................................... 5-30 Vessels supplies .............................................................................................................................. 4-10 Machineries .................................................................................................................................... 4 Vehicles.......................................................................................................................................... 4-8 Office and shipyard equipment ....................................................................................................... 4 Workshop equipment ...................................................................................................................... 8

Depreciation of vessels is computed using residual value of its original acquisition cost. The estimated

residual value of the original acquisition cost is based on management’s best estimate of the historical data

related to gain on sale of vessels owned by the Group, after taking into account the costs incurred in order for

the vessels to be ready for sale, to properly reflect the period of recognition of revenues and expenses. The

residual values, useful lives and methods of depreciation are reviewed and adjusted prospectively, if appropriate,

at each financial year end.

An item of fixed assets is derecognized upon disposal or when no future economic benefits are expected

from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference

between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated

statements of comprehensive income in the year the asset is derecognized.

Land is stated at cost and not amortized.

Construction in progress is stated at cost and presented as part of “Fixed Assets” in the consolidated

statements of financial position. The accumulated costs will be reclassified to the appropriate fixed-asset

accounts when the construction is substantially completed and the constructed asset is ready for its intended use.

Depreciation is charged from the date the assets are ready for use in the manner intended by management.

Taxation

Pursuant to the Decision Letters No. 416/KMK.04/1996 dated June 14, 1996 of the Ministry of Finance of

the Republic of Indonesia and Circular Letter No. 29/PJ.4/1996 dated August 13, 1996 of the Directorate

General of Taxes, revenues from freight operations and charter of vessels are subject to final income tax

computed at 1.2% of the revenues for domestic companies, and the related costs and expenses are considered

non-deductible for income tax purposes.

Corporate income tax expense represents the sum of the corporate income tax currently payable and

deferred tax. The positive (negative) difference between the final income tax paid and the amount charged as

final income tax expense in the consolidated statements of comprehensive income is recognized as prepaid tax

(tax payable).

Current income tax assets and liabilities for the current period are measured at the amount expected to be

recovered from or paid to the tax authority. The tax rates and tax laws used as a basis for computation are those

that have been enacted or substantively enacted as at the reporting dates. Amendments to taxation obligations

are recorded when an assessment is received or if appealed against, when the results of the appeal are

determined. Current tax expense related to income subject to final income tax is recognized in proportion to

total income recognized during the current year for accounting purposes.

Deferred tax is provided using the liability method on temporary differences at the reporting dates

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the

reporting date. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax

assets are recognized for deductible temporary differences and accumulated fiscal losses to the extent that it is

probable that taxable income will be available in future years against which the deductible temporary

differences and accumulated fiscal losses can be utilized. Deferred tax assets and liabilities are recognized in

respect of taxable temporary differences associated with investments in subsidiaries and associates, except

where the timing of the reversal of the temporary differences can be controlled and it is probable that the

temporary differences will not reverse in the foreseeable future. The carrying amount of deferred tax asset is

reviewed at each reporting date and adjusted based on availability of future taxable income.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when

the asset is realized or the liability is settled, based on the tax rates and tax laws that have been enacted or

substantively enacted as at the reporting date. Changes in the carrying amount of deferred tax assets and

liabilities due to a change in tax rates are charged to current year operations, except to the extent that they relate

to items previously charged or credited to equity.

Employee Benefits

We applied PSAK No. 24 (Revised 2013), “Employee Benefits,” to recognize an unfunded employee

benefits liabilities in accordance with the Labor Law. Under PSAK No. 24 (Revised 2013), the cost of providing

employee benefits under the Labor Law is determined using the “Projected Unit Credit” valuation method. The

current service cost of the defined benefit plan is recognized in the consolidated statements of profit or loss and

other comprehensive income in employee benefits expense, which reflects the increase in the defined benefit

obligation resulting from employee service in the current year. Past service costs are recognized immediately in

the consolidated statements of profit or loss and other comprehensive income. Actuarial gain and losses arising

from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other

comprehensive income for the period in which they arise. Gains or losses on the curtailment or settlement of a

defined benefit plan are recognized when the curtailment or settlement occurs.

Cost of Revenues

Our cost of revenues principally consist of, among other things, vessel operational expenses, shipbuilding

expenses, depreciation, salaries and allowances, vessel rental expenses, docking and insurance. The following

tables set forth the breakdown of cost of revenues and each item as a percentage of our total cost of revenues,

respectively, for the years ended December 31, 2012, 2013 and 2014 and the three months ended March 31,

2014 and 2015:

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Cost of Revenues

Vessel operational expenses ............................... 21,796,401 45.2% 36,475,242 51.7% 28,181,466 37.0% 5,704,095 36.5% 7,360,622 34.4%

Shipbuilding expenses ............................... — — 2,861,455 4.1% 15,609,507 20.5% 1,846,478 11.8% 4,975,960 23.3%

Depreciation ............................... 11,174,999 23.2% 11,053,449 15.8% 10,652,044 14.0% 3,069,701 19.6% 2,937,215 13.7% Salaries and

allowances ............................ 4,737,366 9.8% 7,269,387 10.3% 6,941,516 9.1% 1,582,100 10.1% 1,765,316 8.3% Vessel rental

expenses ............................... 316,933 0.7% 3,390,402 4.8% 5,477,622 7.2% 1,035,456 6.6% 2,164,745 10.1% Docking ...................................... 3,451,861 7.2% 3,803,997 5.4% 4,623,393 6.1% 1,048,344 6.7% 1,162,501 5.4% Insurance .................................... 3,780,585 7.8% 3,679,612 5.2% 3,450,206 4.5% 762,613 4.9% 920,524 4.3% Management fee for

vessel operation .................... 558,940 1.2% 1,225,234 1.7% 560,959 0.7% 189,913 1.2% — — Others ......................................... 2,445,467 5.1% 774,425 1.1% 669,328 0.9% 399,165 2.6% 80,740 0.4%

Total .......................................... 48,262,552

100.0

% 70,533,203 100.0% 76,166,041 100.0% 15,637,865 100.0% 21,367,623 100.0%

Vessel operational expenses. Vessel operational expenses comprise expenses for bunker fuel, lube oil,

spare parts, repair and maintenance and equipment and supplies, each in relation to the operation of vessels used

in our shipping business. The following table sets forth the breakdown of vessel operational expenses and each

item as a percentage of our total cost of revenues, respectively, for the years ended December 31, 2012, 2013

and 2014 and the three months ended March 31, 2014 and 2015:

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Vessel Operational

Expenses

Bunker and port expenses .......................... 11,340,517 23.5% 23,573,371 33.4% 18,868,242 24.8% 4,173,298

26.7

% 4,391,307 20.6

% Vessel equipment and

supplies .............................................. 1,793,981 3.7% 1,444,361 2.0% 1,041,159 1.4% 329,118 2.1 % 367,017

1.7 %

Lubricants................................................. 2,174,778 4.5% 2,413,795 3.4% 1,602,110 2.1% 324,637

2.1 % 568,917

2.7 %

Repair and maintenance and spare-parts .................................... 2,544,072 5.3% 4,390,850 6.2% 2,569,127 3.4% 159,636

1.0 % 1,142,008

5.3 %

Ship surveys and

certification ........................................ 1,157,206 2.4% 964,073 1.4% 1,058,413 1.4% 215,761 1.4

% 253,045 1.2

% Brokerage commissions ............................ — — 665,927 0.9% 905,456 1.2% — — — — Water .......................................................

392,135 0.8% 427,347 0.6% 287,292 0.4% 53,290 0.3 % 83,528

0.4 %

Employee travel expenses ............................................. 457,703 0.9% 283,444 0.4% 360,604 0.5% 41,096

0.3 % 83,604

0.4 %

Radio communication expenses ............................................. 272,200 0.6% 278,636 0.4% 302,948 0.4% 101,802

0.7 % 82,389

0.4 %

Others....................................................... 1,663,809 3.4% 2,033,438 2.9% 1,186,115 1.6% 305,457 2.0 388,807 1.8

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

% %

Total ........................................................ 21,796,401

45.2

% 36,475,242 51.7% 28,181,466 37.0% 5,704,095 36.5

% 7,360,622 34.4

%

Shipbuilding expenses. Shipbuilding expenses comprise the expenses for the purchase and import of raw

materials including steel, labor for our shipbuilding crew and the original parts including engines, each in

relation to the shipbuilding activities in our shipyard business.

Depreciation. Depreciation comprises depreciation of our vessels, offices, buildings, cars, equipment,

shipyard facilities, each used in connection with our shipping and/or shipyard businesses, using the straight-line

method over their estimated useful lives.

Salaries and allowances. Salaries and allowance comprise salaries and allowances for our marine crew

which serves as staffing for vessels used in our shipping business.

Vessel rental expenses. Vessel rental expenses comprise expenses incurred to charter-in vessels from

third parties or related parties to serve as substitutes when our vessels are dry docking or to charter out to our

customers when we do not have sufficient vessels in our fleet to meet customer demand.

Docking. Docking comprises amortized docking expenses for the vessels used in our shipping business.

Insurance. Insurance comprises insurance premiums paid for policies covering vessels used in our

shipping business and vessels under construction in connection with our shipyard business.

Management fee for vessel operation. Management fee for vessel operation comprises fees paid to third

party management firms and our related parties, PT Equator Maritime and PT Vektor who advise us on

maintenance schedules for vessels used in our shipping business.

Others. Other cost of revenue primarily comprises expenses for use of tug boats to bring our vessels to

harbor, cleaning of our vessels, construction of barges for use at our shipyard and fees paid to a third party who

provided repair services for one of our vessels that experienced technical difficulties while at sea.

Gross Profit

Our gross profit comprises total revenue less cost of revenue. For the years ended December 31, 2012,

2013 and 2014 and the three months ended March 31, 2014 and 2015, our gross profit was US$23.1 million,

US$35.9 million, US$51.3 million, US$10.6 million and US$12.6 million, respectively, representing

32.4%, 33.7%, 40.3%, 40.3% and 37.1% of our total revenue in the same periods.

Operating Expenses

The following tables set forth the breakdown of our operating expenses and each item as a percentage of

our operating expenses for the years ended December 31, 2012, 2013 and 2014 and the three months ended

March 31, 2014 and 2015:

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Operating expenses

Salaries and allowances................................. 1,744,128 31.6% 2,098,283 31.4% 2,525,969 37.7% 447,244 40.5% 569,802 33.7% Travel expense.............................................. 418,057 7.6% 600,879 9.0% 648,242 9.7% 145,185 13.1% 172,598 10.2% Bank administration ...................................... — — 825,786 12.3% 508,602 7.6% 78,097 7.1% 117,972 7.0% Depreciation ................................................. 308,209 5.6% 335,053 5.0% 392,315 5.9% 96,380 8.7% 287,624 17.0% Allowance for impairment of

trade receivables ..................................... — — 477,711 7.1% 312,240 4.7% — — — — Electricity, water and

telecommunications ................................ 369,032 6.7% 327,133 4.9% 310,630 4.6% 70,522 6.4% 72,003 4.3% Professional fees ........................................... 324,643 5.9% 356,829 5.3% 307,014 4.6% — — — — Office supplies.............................................. — — 72,182 1.1% 299,823 4.5% 18,274 1.7% 123,263 7.3% Repair and maintenance ................................ 177,965 3.2% 216,809 3.2% 276,179 4.1% 58,960 5.3% 47,582 2.8% Entertainment and donation ........................... 164,057 3.0% 400,514 6.0% 266,095 4.0% 42,364 3.8% 111,457 6.6% Insurance ...................................................... — — 207,541 3.1% 223,999 3.3% 50,338 4.6% 50,570 3.0% License and tax ............................................. 335,954 6.1% 231,894 3.5% 143,031 2.1% 46,372 4.2% 10,710 0.6% Employee benefits ........................................ 285,160 5.2% 128,021 1.9% 89,481 1.3% 22,370 2.0% 40,111 2.4% Others .......................................................... 1,393,503 25.2% 413,967 6.2% 389,820 5.8% 29,252 2.6% 88,926 5.3%

Total ............................................................ 5,520,708 100.0% 6,692,605 100.0% 6,693,440 100.0% 1,105,358 100.0% 1,692,618 100.0%

Salaries and allowances. Salaries and allowance comprise salaries and allowance for our management

and our permanent and temporary employees in our offices in Indonesia including our operating, finance, human

resources and other staff and does not include salaries and allowance for our marine or shipbuilding crews.

Travel expenses. Travel expenses comprise travel and accommodation expenses for business trips.

Bank administration. Bank administration comprises administrative fees charged by banks, including

funds transfer fees charged for electronic wire transfers sent and received and account maintenance fees.

Depreciation. Depreciation comprises depreciation for our cars, office, furniture, computers and

software other than in connection with our shipping and shipyard businesses, using the straight-line method over

their estimated useful lives.

Allowance for impairment of trade receivables. Allowance for impairment of trade receivables

comprises recognition of impairment for trade receivables we have determined were uncollectible.

Electricity, water and telecommunications. Energy, water and telecommunications comprises electricity,

water and telecommunications expenses for our offices in Indonesia.

Professional fees. Professional fees comprises fees paid to our auditors, lawyers, actuaries and other

advisors.

Office supplies. Office supplies comprises miscellaneous office supplies for our offices in Indonesia.

Repair and maintenance. Repair and maintenance comprises payments to third party contractors for

repair and maintenance of our offices in Indonesia.

Entertainment and donation. Entertainment and donation comprises meals and entertainment expenses

in relation to our business development activities and donations to local community nonprofit organizations.

Insurance. Insurance comprises insurance premiums paid on our offices and vehicles other than in

connection with our shipping and shipyard businesses.

License and tax. License and tax comprise fees to obtain and renew operating permits and licenses to

carry on our businesses and taxes other than corporate income tax.

Employee benefits. Employee benefits comprise actuarial computation of post-employment benefits

which is calculated in a manner prescribed under the Indonesian Manpower Law.

Others. Other operating expenses comprise expenses relating to advertisement for job postings,

membership fees paid to the Indonesia National Shipowners Association and the Indonesia Shipbuilding

Association, and seminar fees incurred for the training of our employees.

Income from Operations

Our income from operations comprises net revenues less cost of revenue and operating expenses. For the

years ended December 31, 2012, 2013 and 2014 and the three months ended March 31, 2014 and 2015, our

income from operations was US$17.6 million, US$29.2 million, US$44.6 million, US$9.5 million and

US$10.9 million, respectively, representing 24.7%, 27.4%, 35.0%, 36.1% and 32.1% of our total revenue in the

same periods.

Other Income (Expenses)

The following tables set forth the breakdown of our other income and expenses and each item as a

percentage of our operating expenses for the years ended December 31, 2012, 2013 and 2014 and the

three months ended March 31, 2014 and 2015:

Year ended December 31,

Three months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Gain (loss) of foreign exchange — net ................................. 3,480,129 63.0% 14,585,266 217.9% 1,392,537 20.8% (3,956,799) (358.0) 2,980,122 176.1

Finance income .................... 18,601 0.3% 11,101 0.2% 32,751 0.5% 1,788 0.2 10,673 0.6 Finance costs........................ (8,895,041) (161.1%) (9,606,422) (143.5%) (9,638,409) (144.0%) (2,596,442) (234.9) (1,704,615) (100.7) Gain (Loss) on

disposals of fixed assets

and impairment of non-current assets held for (743,659) (13.5%) (4,161,654) (62.2%) (1,246,035) (18.6%) — — 2,876 0.2

Year ended December 31,

Three months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

sale ................................ Others — net ........................ (167,555) (3.0%) 249,719 3.7% 49,761 0.7% (10,768) (1.0) 28,965 1.7

Other income

(Expenses)..................... (6,307,525) (114.3%) 1,078,005 16.1% (9,409,395) (140.6%) (6,562,221) (593.7%) 1,318,021 77.9%

Gain of foreign exchange net. Gain of foreign exchange comprises translation gains and losses on our

monetary assets and liabilities denominated in Rupiah.

Finance income. Finance income primarily comprises interest income on time deposits.

Finance costs. Finance costs primarily comprise interest and loan provision expenses relating to our

bank loans.

Loss on disposal of fixed assets and impairment of non-current assets held for sale. Loss on disposal of

fixed assets and impairment of non-current assets held for sale comprises losses upon sale or disposal of vessels.

Others — net. Others — net primarily comprises income from rental of space in our shipyard and

expenses for late payment penalties for bunker.

Income Tax Benefit (Expenses)

Our income tax benefit (expenses) comprise final, current and deferred tax benefits and/or expenses. Our

revenues from shipping operations are subject to final income tax computed at 1.2% of the revenues and related

costs and expenses are considered non-deductible for income tax purposes. Our tax expenses from our shipping

operations are reflected as final tax benefit (expenses). Revenues from our other operations, including shipyard

operations, are subject to corporate income tax computed at 25.0% of income before income tax benefit

(expense). We derive deferred tax benefits for periods in which we sustain losses from our shipyard operations,

which amount to 25.0% of the losses sustained for the respective period. We sustained losses in our shipyard

operations for the years ended December 31, 2012 and 2013 and the three months ended March 31, 2015, and

recorded a deferred tax benefit of US$87,633,0 US$1.1 million and US$0.3 million, respectively, portions of

which were used to offset income tax expense for our shipyard operations for the year ended December 31, 2014

and the three months ended March 31, 2014.

The following table shows the breakdown of our income tax expenses and each item as a percentage of

our total income tax expense for the periods indicated:

Year ended December 31,

Three months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Final ............................................ (855,090) 110.3% (1,082,557) 42,270.9% (1,214,966) 61.8% (283,436) 27.9% (328,164) 17,586.5% Current ......................................... (7,855) 1.0% (9,586) 374.3% (31,373) 1.6% (7,860) 0.8 (1,877) 100.6% Deferred ....................................... 87,633 (11.3%) 1,089,582 (42,545.2%) (720,521) 36.6% (725,130) 71.3 328,175 (17,587.1%)

Total ............................................ (775,312) 100.0% (2,561) 100.0% (1,966,860) 100.0% (1,016,426) 100.0% (1,866) 100.0%

Results of Operations

The following table sets forth selected consolidated income statement data of the Company expressed as a

percentage net revenue for the periods indicated.

For the Years Ended December 31,

For the Three Months Ended

March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Net revenues ...................................... 71,391,473 100.0% 106,404,574 100.0% 127,477,386 100.0% 26,212,208 100.0% 33,954,116 100.0% Cost of revenues ................................. 48,262,552 67.6% 70,533,203 66.3% 76,166,041 59.7% 15,637,865 59.7% 21,367,623 62.9%

Gross profit ........................................ 23,128,921 32.4% 35,871,371 33.7% 51,311,345 40.3% 10,574,343 40.3% 12,586,493 37.1% Operating expenses ............................ 5,520,708 7.7% 6,692,605 6.3% 6,693,440 5.3% 1,105,358 4.2% 1,692,618 5.0%

Income from

operations .................................... 17,608,213 24.7% 29,178,766 27.4% 44,617,905 35.0% 9,468,985 36.1% 10,893,875 32.1%

Other income

(Expenses)

Gain of foreign

exchange — net ............................. 3,480,129 4.9% 14,585,266 13.7% 1,392,537 1.1% (3,956,799) (15.1%) 2,980,122 8.8% Finance income ................................... 18,601 0.0% 11,101 0.0% 32,751 0.0% 1,788 0.0% 10,673 0.0% Finance costs ....................................... (8,895,041) (12.5%) (9,606,422) (9.0%) (9,638,409) (7.6%) (2,596,442) (9.9%) (1,704,615) (5.0%) Loss on disposal of

fixed assets and impairment of non-current asset held for sale .......................................... (743,659) (1.0%) (4,161,654) (3.9%) (1,246,035) (1.0%) — — 2,876 0.0%

Others — net ....................................... (167,555) (0.2%) 249,714 0.2% 49,761 0.0% (10,768) 0.0% 28,965 0.1% Other income

(Expenses) — net ............................... (6,307,525) (8.8%) 1,078,005 1.0% (9,409,395) (7.5%) (6,562,221) (25.0%) 1,318,021 3.9%

Income before income

tax benefit

(expense) ...................................... 11,300,688 15.9% 30,256,771 28.4% 35,208,510 27.5% 2,906,764 11.1% 12,211,896 28.2% Income tax benefit

(expense)

Final ................................................... (855,090) (1.2%) (1,082,557) (1.0%) (1,214,966) (1.0%) (283,436) (1.1%) (328,164) (1.0%) Current ................................................ (7,855) 0.0% (9,586) 0.0% (31,373) 0.0% (7,860) 0.0% (1,877) 0.0% Deferred .............................................. 87,633 0.1% 1,089,582 1.0% (720,521) (0.6)% (725,130) (2.8%) 328,175 1.0%

Income Tax Expense — net................................................. (775,312) (1.1%) (2,561) 0.0% (1,966,860) (1.6%) (1,016,426) (3.9%) (1,866) 0.0%

Income for the year............................ 3,658,313 14.8% 30,254,210 28.4% 33,241,650 25.9% 1,890,338 7.2% 12,210,030 28.2% Other comprehensive

income .......................................... —

—

—

— — (121,393) (0.4%) Total comprehensive

income for the

year .............................................. 3,658,313 14.8% 30,254,210 28.4% 33,241,650 25.9% 1,890,338 7.2% 12,088,637 27.8%

Three Months Ended March 31, 2015 compared to Three Months Ended March 31, 2014

Net Revenues. Net revenues increased by 29.6% to US$34.0 million in the three months ended

March 31, 2015 from US$26.2 million in the three months ended March 31, 2014, as a result of an increase in

net revenue from both shipping services and shipyard services.

Shipping services. Net revenues from shipping services increased by 15.7% to US$27.6 million in the

three months ended March 31, 2015 from US$23.9 million in the three months ended March 31, 2014, primarily

as a result of:

• a 12.2% increase in time charter revenue (including time charter revenue from related parties) to

US$20.1 million from US$17.9 million; and

• a 26.3% increase in spot charter revenue to US$7.5 million from US$6.0 million.

The increase in our time charter revenue was mainly attributable to the full utilization of one of our

VLCCs in the three months ended March 31, 2015 as compared to the three months ended March 31, 2014,

where the same VLCC was dry docked, two additional time charters that were entered into over two Medium

Range vessels that we chartered-in from our related parties as compared to 2014, and the full utilization of an

Aframax vessel that we acquired at the end of 2014 in the three months ended March 31, 2015. These increases

were partially offset by a decrease in revenue due to the sale of an Aframax vessel and a Medium Range vessel

at the end of 2014, and the dry docking of a Medium Range vessel and two General Purpose vessels and repair

and maintenance work required for an Aframax vessel and a General Purpose vessel in the three months ended

March 31, 2015.

The increase in our spot charter revenue was mainly attributable to the addition of an Aframax vessel to

our fleet at the end of 2014 that we leased in the spot market upon taking delivery pending entry into time

charter contracts and an additional spot charter that was entered into over a third party vessel that we chartered-

in as compared to the three months ended March 31, 2014. These increases were partially offset by a decrease in

revenue due to the dry docking of one of our VLCCs and two of our General Purpose vessels, which were all

deployed under spot charter contracts in the three months ended March 31, 2014.

Shipyard services. Net revenues from shipyard services (including shipyard services revenue from

related parties) increased by 172.1% to US$6.3 million in the three months ended March 31, 2015 from US$2.3

million in the three months ended March 31, 2014, primarily as a result of:

• the commencement of four newbuild projects in the third quarter of 2014, comprising of two 17,500

DWT oil tankers for Pertamina and one 4,000 DWT self-propelled oil barge for PT Sejahtera Bahari

Abadi and one 3,500 DWT oil tanker for PT Lautan Pasifik Sejahtera, a related party, for which we

were able to recognize US$4.0 million in revenue based on the percentage of completion of these

projects in the three months ended March 31, 2015; and

• progress in the construction of the 17,500 DWT oil tanker for Pertamina that commenced

construction in September 2013, for which we were able to recognize US$2.4 million in revenue

based on the percentage of completion of this newbuild in the three months ended March 31, 2015.

Cost of Revenues. Cost of revenues increased by 36.6% to US$21.4 million in the three months ended

March 31, 2015 from US$15.6 million in the three months ended March 31, 2014, primarily as a result of:

• a 29.0% increase in vessel operational expenses to US$7.4 million from US$5.7 million, which was

mainly attributable to (i) an increase in bunker and port expenses that was due to two additional

vessels in our fleet as compared to the three months ended March 31, 2014, (ii) an increase in

lubricant expenses that resulted from the need to refill the lubricants required for both our VLCCs

and (iii) an increase in repair and maintenance and spare-parts expenses that was attributable to

repairs for an Aframax vessel that had a leaking tank;

• a 169.5% increase in shipbuilding expenses to US$5.0 million from US$1.8 million, which was

mainly attributable to the increase in percentage of completion of the four newbuild projects that

commenced construction in the third quarter of 2014 and the increase in the percentage of

completion of the 17,500 DWT oil tanker for Pertamina that commenced construction in September

2013;

• a 109.1% increase in vessel rental expenses to US$2.2 million from US$1.0 million, which was

mainly attributable to the two related party Medium Range vessels that we chartered-in to fill

customer demand in the time charter market and the third party Medium Range vessel that we

chartered-in to replace a chartered-in third party Aframax vessel that we deployed in the spot charter

market;

• a 11.6% increase in salaries and allowances to US$1.8 million from US$1.6 million, which was

mainly attributable to the additional operational staff we hired for the vessels that we acquired at the

end of 2014 and in the three months ended March 31, 2015; and

• a 20.7% increase in insurance expenses to US$0.9 million from US$0.8 million, which was mainly

attributable to insurance taken up for the two General Purpose vessels that we acquired in the

three months ended March 31, 2015 and the two Aframax vessels that we acquired at the end of

2014 and war risk insurance taken up for our VLCC that traveled to areas in the Middle East, that

was partially offset by yearly decreases in insurance premiums resulting from the increased age of

our respective vessels and decreases in insurance premiums due to the sale of an Aframax vessel

and a Medium Range vessel at the end of 2014;

which were partially offset by:

• a 4.3% decrease in depreciation expenses to US$2.9 million from US$3.1 million, which was

mainly attributable to a disposal of one Medium Range vessel at the end of 2014 (no depreciation

expenses were recorded for the Aframax vessel that we sold at the end of 2014 as it was classified

as an asset held for sale at the end of 2013, at which point we stopped recording depreciation

expenses for the same) and the full depreciation of six of our General Purpose vessels in 2014, that

was partially offset by increases in depreciation from two Aframax vessels that we acquired at the

end of 2014 and the two General Purpose vessels that we acquired in the three months ended March

31, 2015; and

• a 79.8% decrease in other expenses to US$80,740.0 from US$0.4 million, which was mainly

attributable to the non-recurring fees paid to a third party in the three months ended March 31,

2014, who provided repair services for one of our Aframax vessels that experienced technical

difficulties while at sea.

Gross profit. As a result of the foregoing, gross profit increased by 19.1% to US$12.6 million in the

three months ended March 31, 2015, representing a gross profit margin of 37.1%, from US$10.6 million in the

three months ended March 31, 2014, representing a gross profit margin of 40.3%.

Operating Expense. Operating expense increased by 53.1% to US$1.7 million in the three months

ended March 31, 2015 from US$1.1 million from the three months ended March 31, 2014, primarily as a result

of:

• the 27.4% increase in salaries and allowances to US$0.6 million from US$0.4 million, which was

mainly attributable to increases in salaries and the hiring of additional staff and foreign technical

managers;

• the 18.9% increase in travel expenses to US$172,598.0 from US$145,185.0, which was mainly

attributable to increased traveling made by staff to perform work relating to our shipyard;

• the 198.4% increase in depreciation to US$287,624.0 from US$96,380.0, which was mainly

attributable to us beginning to record depreciation of our shipyard facilities in the three months

ended March 31, 2015 and increases in the number of corporate vehicles that we depreciate on a

straight-line basis;

• the 574.5% increase in office supplies to US$123,263.0 from US$18,274.0, which was mainly

attributable to purchases of electrical office equipment, such as lamps and cables, that was required

for the renovation of our offices in the three months ended March 31, 2015;

• the 51.1% increase in bank administration expenses to US$117,972.0 from US$78,097.0, which was

mainly attributable to additional bank loans we took in the three months ended March 31, 2015 as

compared to the three months ended March 31, 2014;

• the 163.1% increase in entertainment and donation expenses to US$111,457.0 from US$42,364.0,

which was mainly attributable to donations made to the local communities in proximity of our

shipyard; and

• the 204.0% increase in other expenses to US$88,926.0 from US$29,252.0, which was mainly

attributable to expenses relating social events organized for our employees following the successful

initial public offering of our Company’s shares;

which were partially offset by:

• the 19.3% decrease in repair and maintenance to US$47,582.0 from US$58,960.0, which was

mainly attributable to less repair and maintenance work required by our corporate vehicles in the

three months ended March 31, 2015 as compared to the three months ended March 31, 2014; and

• the 76.9% decrease in license and tax expenses to US$10,710.0 from US$46,372.0, which was

mainly attributable to lower expenses relating to tenders and business licenses as fewer tenders were

submitted in the three months ended March 31, 2015 and more of our business licenses were

renewed in the three months ended March 31, 2014.

Income from Operations. As a result of the foregoing, income from operations increased by 15.1% to

US$10.9 million in the three months ended March 31, 2015 from US$9.5 million in the three months ended

March 31, 2014.

Other Income (Expenses). Other income was US$1.3 million in the three months ended March 31,

2015 as compared to other expenses of US$6.6 million in the three months ended March 31, 2014, primarily due

to the increase in our gain on foreign exchange — net to US$3.0 million from US$(4.0) million, which was

mainly attributable to a greater appreciation of the U.S. dollar against the Rupiah in the three months ended

March 31, 2015.

Income Before Income Tax Benefit (Expense). As a result of the foregoing, income before income tax

benefit (expense) increased to US$12.2 million in the three months ended March 31, 2015 from US$2.9 million

in the three months ended March 31, 2014.

Income tax benefit (expense). Our income tax expense was US$1,866 in the three months ended

March 31, 2015 as compared to US$1.0 million in the three months ended March 31, 2014 primarily due to an

appreciation of the U.S. dollar against the Rupiah in the three months ended March 31, 2015, which resulted in

us recording a loss over our shipyard operations for that period as the financial accounts of our shipyard

business for tax purposes are reflected in Rupiah, as compared to a strengthening of the Rupiah against the U.S.

dollar in the three months ended March 31, 2014, which resulted in us recording a profit over our shipyard

operations for that period.

Total income. As a result of the foregoing, our total income increased to US$12.2 million in the

three months ended March 31, 2015 from US$1.9 million in the three months ended March 31, 2014.

Year Ended December 31, 2014 compared to the Year Ended December 31, 2013

Net Revenues. Net revenues increased by 19.8% to US$127.5 million in the year ended December 31,

2014 from US$106.4 million in the year ended December 31, 2013, as a result of an increase in net revenue

from both shipping services and shipyard services.

Shipping services. Net revenues from shipping services increased by 4.8% to US$107.4 million in the

year ended December 31, 2014 from US$102.5 million in the year ended December 31, 2013, primarily as a

result of:

• a 5.8% increase in time charter revenue (including time charter revenue from related parties) to

US$65.3 million from US$61.7 million; and

• a 3.2% increase in spot charter revenue to US$42.1 million from US$40.8 million.

The increase in our time charter revenue was mainly attributable to the full utilization in 2014 of an

Aframax vessel that we acquired in the middle of 2013, as compared to the full utilization of the same vessel for

only the remaining period of 2013 after the vessel was purchased, three additional time charters that were

entered into over two related party Medium Range vessels and a third party Aframax vessel that we chartered-in

as compared to 2013, the reallocation of a Medium Range vessel from the spot to the time charter market, and

the increase in charter rates for two General Purpose vessels under new time charter contracts. These increases

were partially offset by a decrease in revenue due to the sale of an Aframax vessel in at the end of 2013.

The increase in our spot charter revenue was mainly attributable to an increase in the number of spot

charters in 2014 as compared to 2013, the addition of two Aframax vessels to our fleet in 2014 that we chartered

in the spot market upon taking delivery pending entry into time charter contracts and the reallocation of two

General Purpose vessels and a VLCC from the time charter to the spot charter market. These increases were

partially offset by a decrease in revenue due to the dry docking of five General Purpose vessels and a decrease

in revenue due to the reallocation of a Medium Range vessel from the spot to the time charter market.

Shipyard services. Net revenues from shipyard services (including shipyard services revenue from

related parties) increased by 414.3% to US$20.1 million in the year ended December 31, 2014 from US$3.9

million in the year ended December 31, 2013, primarily as a result of:

• the commencement of four newbuild projects in the third quarter of 2014, comprising two 17,500

DWT oil tankers for Pertamina and one 4,000 DWT self-propelled oil barge for PT Sejahtera Bahari

Abadi and one 3,500 DWT oil tanker for PT Lautan Pasifik Sejahtera, a related party, for which we

were able to recognize US$10.2 million in revenue based on the percentage of completion of these

projects in 2014; and

• progress in the construction of the 17,500 DWT oil tanker for Pertamina that commenced

construction in September 2013, for which we were able to recognize US$9.6 million in revenue

based on the percentage of completion of this newbuild in 2014.

Cost of Revenues. Cost of revenues increased by 8.0% to US$76.2 million in the year ended

December 31, 2014 from US$70.5 million in the year ended December 31, 2013, primarily as a result of:

• a 445.5% increase in shipbuilding expenses to US$15.6 million from US$2.9 million, which was

mainly attributable to the commencement of the four newbuild projects in the third quarter of 2014

and the increase in percentage of completion of the 17,500 DWT oil tanker for Pertamina that

commenced construction in September 2013;

• a 61.6% increase in vessel rental expenses to US$5.5 million from US$3.4 million, which was

mainly attributable to the two related party Medium Range vessels that we chartered-in to fill

customer demand in the spot market, that was partially offset by a reduction in vessel rental expense

as we replaced a chartered-in third party VLCC that we used in a time charter contract with

Pertamina with a VLCC that we acquired at the end of 2013; and

• a 21.5% increase in docking expenses to US$4.6 million from US$3.8 million, which was mainly

attributable to docking expenses for our VLCC that was dry docked in 2014;

which were partially offset by:

• a 22.7% decrease in vessel operational expenses to US$28.2 million from US$36.5 million, which

was mainly attributable to (i) a decrease in bunker and port expenses that resulted from lower

bunker prices in 2014 as compared to 2013 and lower bunker and port expenses due to the

appreciation of the U.S. dollar, which is our functional currency and the currency in which we

receive our shipping and shipyard revenues, against the Rupiah, which is the currency in which we

pay a substantial portion of our bunker and port expenses and (ii) a decrease in repair and

maintenance expenses as our vessels required more extensive repairs in 2013 as compared to 2014;

• a 3.6% decrease in depreciation expenses to US$10.6 million from US$11.1 million, which was

mainly attributable to a disposal of an Aframax vessel in 2014 and the full deprecation of three of

our General Purpose vessels in 2013, that was partially offset by increases in depreciation from two

Aframax vessels that we acquired in 2014 and the VLCC that we acquired at the end of 2013;

• a 4.5% decrease in salaries and allowances to US$6.9 million from US$7.3 million, which was

mainly attributable to an appreciation of the U.S. dollar, which is our functional currency and the

currency in which we receive our shipping and shipyard revenues, against the Rupiah, which is the

currency in which we pay our employees’ salaries and allowances;

• a 6.2% decrease in insurance expenses to US$3.5 million from US$3.7 million, which was mainly

attributable to us not having to pay insurance for an Aframax vessel that we sold in 2014, that was

partially offset by additional insurance expense for our VLCC that we purchased at the end of 2013;

and

• a 54.2% decrease in management fees for vessel operations to US$0.6 million from US$1.2 million,

which was mainly attributable to our termination of vessel management services provided by a third

party vessel management service provider for two General Purpose vessels and one Aframax vessel

in June 2013, a third party vessel management service provider for our VLCC in September 2013,

and PT Vektor Maritim and PT Equator Maritim for five General Purpose vessels in September

2014, and us managing those vessels ourselves.

Gross profit. As a result of the foregoing, gross profit increased by 43.0% to US$51.3 million in the

year ended December 31, 2014, representing a gross profit margin of 40.3%, from US$35.9 million in the year

ended December 31, 2013, representing a gross profit margin of 33.7%.

Operating Expense. There was no substantial change in operating expense between the years ended

December 31, 2014 and 2013, and operating expense for both years were US$6.7 million, primarily because:

• the 20.4% increase in salaries and allowances to US$2.5 million from US$2.1 million, which was

mainly attributable to increases in salaries and the hiring of additional staff and foreign technical

managers;

• the 7.9% increase in travel expenses to US$0.7 million from US$0.6 million, which was mainly

attributable to increased traveling made by staff to perform work relating to our shipyard;

• the 17.1% increase in depreciation to US$392,315.0 from US$335,053.0, which was mainly

attributable to the increase in the number of corporate vehicles that we depreciate on a straight-line

basis;

• the 315.4% increase in office supplies to US$0.3 million from US$72,185.0, which was mainly

attributable to purchases of electrical office equipment, such as lamps and cables that was required

for the renovation of our offices in 2014;

• the 27.4% increase in repair and maintenance to US$276,179.0 from US$216,809.0, which was

mainly attributable to office renovation works that was performed in 2014; and

• the 7.9% increase in insurance to US$223,999.0 from US$207,541.0, which was mainly attributable

to the purchase of insurance for the corporate vehicles that were bought in 2014 and for construction

insurance for our shipyard;

which were partially offset by:

• the 38.4% decrease in bank administration expenses to US$0.5 million from US$0.8 million, which

was mainly attributable to the larger number of loans we took in 2013 as compared to 2014;

• the 34.6% decrease in allowance for impairment of trade receivables to US$312,240.0 from

US$477,711.0, which was mainly attributable to the write-off of a trade receivable from Pertamina

that related to insurance charges for war risk insurance that we took up for a Pertamina chartered

VLCC that traveled to areas in the Middle East;

• the 14.0% decrease in professional fees to US$307,014.0 from US$356,829.0, which was mainly

attributable to higher audit fees that were incurred in preparation of the initial public offering of our

Company’s shares in 2013;

• the 33.6% decrease in entertainment and donation expenses to US$266,095.0 from US$400,514.0,

which was mainly attributable to donations made in 2013 for scholarships for further education of

our crew and for the construction of the Tzu Chi Building, a building used to house a charitable

foundation; and

• the 38.3% decrease in license and tax expenses to US$143,031.0 from US$231,894.0, which was

mainly attributable to lower expenses relating to tenders and business licenses as less tenders were

submitted in 2014 and more of our business licenses were renewed in 2013.

Income from Operations. As a result of the foregoing, income from operations increased by 52.9% to

US$44.6 million in the year ended December 31, 2014 from US$29.2 million in the year ended December 31,

2013.

Other Income (Expenses). Other expenses was US$9.4 million in the year ended December 31, 2014 as

compared to other income of US$1.1 million in the year ended December 31, 2013, primarily due to the

decrease in our gain on foreign exchange — net to US$1.4 million in 2014 from US$14.6 million in 2013,

which was mainly attributable to a greater appreciation of the U.S. dollar against the Rupiah in 2013 as

compared to 2014. The decrease in our gain on foreign exchange-net was partially offset by a decrease in the

loss on disposal of fixed assets and impairment of non-current assets held for sale to US$1.2 million from

US$4.2 million, which was mainly attributable to a greater loss on disposal we sustained over the sale of an

Aframax vessel in 2013 as compared to the loss on disposal we sustained over the sale of a Medium Range

vessel in 2014.

Income Before Income Tax Benefit (Expense). As a result of the foregoing, income before income tax

benefit (expense) increased to US$35.2 million in the year ended December 31, 2014 from US$30.3 million in

the year ended December 31, 2013.

Income tax benefit (expense). Our income tax expense was US$2.0 million in the year ended

December 31, 2014 as compared to US$2,561.0 in the year ended December 31, 2013, primarily due to our

shipyard operations becoming profitable in 2014 as compared to 2013 where we sustained a loss.

Total income. As a result of the foregoing, our total income increased to US$33.2 million in the year

ended December 31, 2014 from US$30.3 million in the year ended December 31, 2013.

Year Ended December 31, 2013 compared to the Year Ended December 31, 2012

Net Revenues. Net revenues increased by 49.0% to US$106.4 million in the year ended December 31,

2013 from US$71.4 million in the year ended December 31, 2012, as a result of an increase in net revenue from

both shipping services and shipyard services.

Shipping services. Net revenues from shipping services increased by 44.5% to US$102.5 million in the

year ended December 31, 2013 from US$70.9 million in the year ended December 31, 2012, primarily as a

result of:

• a 16.9% increase in time charter revenue (including time charter revenue from related parties) to

US$61.7 million from US$52.7 million; and

• a 124.5% increase in spot charter revenue to US$40.8 million from US$18.2 million.

The increase in our time charter revenue was attributable to the full utilization in 2013 of our oil tanker

that was modified into a FSO in 2012, the full utilization in 2013 of seven of our General Purpose vessels that

were dry docked in 2012, and the addition of an Aframax vessel and a Medium Range vessel to our fleet in June

2013. These increases were partially offset by a decrease in revenue due to the decrease in the utilization rates of

an Aframax vessel in 2013 as we took the vessel off charter in preparation for sale and a decrease in revenue due

to the reallocation of a General Purpose vessel from the time to the spot charter market.

The increase in our spot charter revenue was attributable to the addition of a General Purpose vessel to our

fleet at the end of 2012 that was fully utilized over 2013, as compared to the full utilization of the same vessel

for only the remaining period of 2012, the addition of a Medium Range vessel to our fleet in March 2013, an

additional spot charter that was entered into over a third party VLCCs that we chartered-in, and the full

utilization of the a General Purpose vessel over 2013 that we purchased in October 2012. These increases were

partially offset by a decrease in revenue due to the dry docking of two General Purpose vessels for repair and

maintenance and a decrease in revenue due to the disposal of a General Purpose vessel at the end of 2012.

Shipyard services. Net revenues from shipyard services (including shipyard services revenue from

related parties) increased by 796.2% to US$3.9 million in the year ended December 31, 2013 from US$435,876

million in the year ended December 31, 2012, primarily as a result of the commencement of one newbuild

project, a 17,500 DWT oil tanker for Pertamina, that began in the second quarter of 2013, for which we were

able to recognize US$3.6 million in revenue based on the percentage of completion of the vessel.

Cost of Revenues. Cost of revenues increased by 46.1% to US$70.5 million in the year ended

December 31, 2013 from US$48.3 million in the year ended December 31, 2012, primarily as a result of:

• US$2.9 million in shipbuilding expenses incurred in 2013, which was mainly attributable to the

commencement of shipbuilding operations at our shipyard and construction of a 17,500 DWT oil

tanker for Pertamina in 2013;

• a 969.8% increase in vessel rental expenses to US$3.4 million from US$316,933.0, which was

mainly attributable to one third party VLCC that we chartered-in to fill customer demand in the spot

market;

• a 67.3% increase in vessel operating expenses to US$36.5 million from US$21.8 million, which was

mainly attributable to (i) an increase in bunker and port expenses that was due to an increase in the

number of spot charters we had in 2013 as compared to 2012, where we were responsible for paying

voyage expenses, including bunker and port expenses, which was partially offset by the

appreciation of the U.S. dollar, which is our functional currency and the currency in which we

receive our shipping and shipyard revenues, against the Rupiah, which is the currency in which we

pay a substantial portion of our bunker and port expenses, (ii) an increase in repair and maintenance

and spare-parts expenses that was attributable to the larger number and higher cost of the spare-

parts required by our vessels in 2013 as compared to 2012, (iii) brokerage commissions that were

attributable to us commencing the use of brokers for procuring vessel charters outside of Indonesia,

and (iv) an increase in other expenses that was due to higher courier costs that we incurred to

transport spare-parts to our vessels for their repair and maintenance;

• a 53.4% increase in salaries and allowances to US$7.3 million from US$4.7 million, which was

mainly attributable to increased crew wages for new crew required for the VLCC, Aframax vessel

and Medium Range vessel that we purchased in 2013, additional crew required for the Aframax

vessel and two General Purpose vessels that we purchased in 2012 as their available days increased

in 2013, and new crew required for the FSO that we modified from an oil tanker, for which

modifications were completed at the end of 2012;

• a 119.2% increase in management fees for vessel operations to US$1.2 million from US$0.6

million, which was mainly attributable to management fees paid to a third party vessel management

service provider for the management of vessels held by ABPL, that was partially offset by our

termination of vessel management services provided by a third party vessel management service

provider for two Aframax vessels, one General Purpose vessel and one Medium Range vessel in

June 2013 and, a third party vessel management service provider for our VLCC in September 2013;

and

• a 10.2% increase in docking expenses to US$3.8 million from US$3.5 million, which was mainly

attributable to docking expenses for a Medium Range vessel that was dry docked in 2013 for repair

and maintenance the sale of two General Purpose vessels in 2012 before they had to be dry docked,

that contributed to lower docking expenses in 2012 as compared to 2013;

which were partially offset by:

• a 68.3% decrease in other cost of revenue to US$0.8 million from US$2.4 million, which was

mainly attributable to a barge that we built for use in our shipyard that we recognized as a non-

recurring expense.

Gross profit. As a result of the foregoing, gross profit increased by 55.1% to US$35.9 million in the

year ended December 31, 2013, representing a gross profit margin of 33.7%, from US$23.1 million in the year

ended December 31, 2012, representing a gross profit margin of 32.4%.

Operating Expense. Operating expense increased by 21.2% to US$6.7 million in the year ended

December 31, 2013 from US$5.5 million in the year ended December 31, 2012, primarily due to:

• the 20.3% increase in salaries and allowances to US$2.1 million from US$1.7 million, which was

mainly attributable to increases in salaries for our directors and commissioners;

• the 43.7% increase in travel expenses to US$0.6 million from US$0.4 million, which was mainly

attributable to increased traveling made by staff due to perform work relating to the shipyard;

• the 8.7% increase in depreciation to US$335,053.0 from US$308,209.0, which was mainly

attributable to the increase in the number of corporate vehicles that we depreciate on a straight-line

basis;

• the 21.8% increase in repair and maintenance to US$216,809.0 from US$177,965.0, which was

mainly attributable to office renovation works that was performed in 2013;

• the 144.1% increase in entertainment and donation expenses to US$400,514.0 from US$164,057.0,

which was mainly attributable to donations made in 2013 for scholarships for further education of

our crew and for the construction of the Tzu Chi Building; and

• the 9.9% increase in professional fees to US$356,829.0 from US$324,643.0, which was mainly

attributable to higher audit fees that were incurred in preparation of the initial public offering of our

Company’s shares in 2013.

Income from Operations. As a result of the foregoing, income from operations increased by 65.7% to

US$29.2 million in the year ended December 31, 2013 from US$17.6 million in the year ended December 31,

2012.

Other Income (Expenses). Other income was US$1.1 million in the year ended December 31, 2013 as

compared to other expenses of US$6.3 million in the year ended December 31, 2012, primarily due to:

• the increase in our gain on foreign exchange — net to US$14.6 million from US$3.5 million, was

mainly attributable to a greater appreciation of the U.S. dollar against the Rupiah in 2013 as

compared to 2012, where we recognized such a gain when we repaid certain of our loans that were

denominated in Rupiah; and

• the increase in others — net to US$249,714.0 from US$(167,555.0), which was main attributable to

compensation we received for damages to our jetty caused by a third party vessel collision;

which were partially offset by:

• an increase in the loss on disposal of fixed assets and impairment of non-current assets held for sale

to US$4.2 million from US$0.7 million, which was mainly attributable to a greater loss on disposal

we sustained over the sale of our Aframax vessel in 2013 as compared to the loss on disposal we

sustained over the sale of our three General Purpose vessels in 2012.

Income Before Income Tax Benefit (Expense). As a result of the foregoing, income before income tax

benefit (expense) increased to US$30.3 million in the year ended December 31, 2013 from US$11.3 million in

the year ended December 31, 2012.

Income tax benefit (expense). Our income tax benefit was US$2,561.0 in the year ended December 31,

2013 as compared to US$775,312.0 in the year ended December 31, 2012, primarily due to the deferred tax

benefit which we derived from losses sustained over our shipyard operations in 2012, which we applied to offset

our income tax expenses in 2013.

Total income. As a result of the foregoing, our total income increased to US$30.3 million in the year

ended December 31, 2013 from US$3.7 million in the year ended December 31, 2012.

Liquidity and Capital Resources

We have principally used our cash flow from operations and cash from our debt facilities for the

expansion of our fleet and the construction of our shipyard. Our main source of liquidity has been cash received

from our customers and U.S. dollar and Rupiah-denominated bank loans. As of December 31, 2012, 2013 and 2014 and March 31, 2015, our current liabilities exceeded our current

assets by US$71.4 million, US$59.1 million, US$31.2 million and US$47.0 million, respectively. We operate in

a capital intensive industry and frequently purchase vessels as part of our ongoing business operations. In

addition, the construction of our shipyard has required a significant amount of capital. We typically fund our

vessel acquisitions and have primarily funded the construction of our shipyard through cash flows from

operating activities and medium to long-term debt, including bank loans and shareholder loans. Our negative

working capital position has primarily resulted from substantial current maturities of our long-term bank loans

and amounts due to related parties, which primarily represents amounts owed under shareholder loans. These

shareholder loans are classified as current liabilities as they are payable on demand. As of December 31, 2012,

2013 and 2014 and March 31, 2015, our current maturity of long-term bank loans was US$27.4 million,

US$31.9 million, US$38.2 million and US$36.9 million, respectively. We manage our negative working capital

position primarily by refinancing our long-term loans as and when they come due and through our cash flow

from operating activities.

For the year ended December 31,

For the three months ended

March 31,

2012

2013

2014

2014

2015

(Unaudited)

(US$) (US$) Cash Flows from Operating Activities

Receipts from customers ........................................................ 67,717,419 95,498,527 130,306,642 27,340,411 27,516,203 Payment to Employees .......................................................... (6,842,622) (10,471,227) (10,397,173) (1,942,683) (2,376,003) Payments to Suppliers and Others .......................................... (41,584,965) (50,773,399) (59,677,669) (11,966,244) (23,730,524) Receipt of Financing Income ................................................. 18,601 11,101 32,751 1,788 10,673 Payment for:

Financing Costs ................................................................ (11,211,896) (14,028,864) (14,899,394) (3,385,109) (3,206,573) Income Taxes .................................................................... (2,482) (11,605) (11,667) (2,233) (1,336)

Net Cash Provided by Operating Activities ........................ 8,094,055 20,224,533 45,353,490 10,045,930 (1,787,560)

Cash Flows from Investing Activities

Proceeds from Disposals of Fixed Assets and Non-

Current Assets held for sale ............................................... 833,219 21,456 11,195,598 — 83,520 Acquisition of Fixed Assets ................................................... (53,299,171) (75,908,951) (63,800,977) (1,318,648) (14,702,431) Acquisition of Intangible Assets ............................................ (39,963) (160,762) (3,100) (4,702) —

Net Cash Used In Investing Activities ................................. (52,505,915) (76,048,257) (52,608,479) (1,323,350) (14,618,911)

Cash Flows from Financing Activities

Proceeds from Bank Loans .................................................... 64,635,258 58,047,700 52,273,853 1,637,006 3,874,475 Proceeds from Initial Public Offering .................................... — — 45,801,714 — — Payment of Bank Loans ......................................................... (24,478,476) (28,691,863) (60,814,656) (6,549,475) (8,080,231) Receipt (payment) of Related Parties Loans — Net ............... (491,215) 828,702 (11,369,837) (2,817,337) 13,214,820 Payment of Finance Lease and Consumer Financing

Payables ............................................................................ (452,308) (569,864) (407,663) (68,448) (110,981) Payment of Cash Dividend to Non-Controlling Interests

— Net ............................................................................... (70,508) — — — — Proceeds from Issuance of Additional Share Capital .............. 5,927,419 25,336,982 — — — Acquisition of Subsidiary — Net ........................................... (1,232,811) (48,710) — — —

For the year ended December 31,

For the three months ended

March 31,

2012

2013

2014

2014

2015

(Unaudited)

(US$) (US$) Net Cash Provided by Financing Activities ........................ 43,837,359 54,902,947 25,483,411 (7,798,254) 8,898,083

Net Increase (Decrease) in Cash and Cash Equivalents ..... (574,501) (920,777) 18,228,422 924,326 (7,508,388) Cash and Cash Equivalents at the Beginning of the

Year ................................................................................. 2,431,820 1,857,319 936,542 936,542 19,164.964

Cash and Cash Equivalents at the End of the Year ........... 1,857,319 936,542 19,164,964 1,860,868 11,656,576

Net Cash Provided by Operating Activities

Net cash provided by operating activities consists of receipts from customers and receipts of financing

income (which represents interest earned on bank deposits), net of payments to employees, payments to

suppliers and others, payments for financing costs and payments for income taxes.

In the three months ended March 31, 2015, receipts from customers totaled US$27.5 million and receipts

of financing income totaled US$10,673.0. After taking into account payments to employees totaling

US$2.4 million, payments to suppliers and others totaling US$19.9 million, payments for financing costs

totaling US$3.2 million and payments for income tax totaling US$1,336.0, our net cash provided by operating

activities amounted to US$2.1 million in the three months ended March 31, 2015.

In the three months ended March 31, 2014, receipts from customers totaled US$27.3 million and receipts

of financing income totaled US$1,788.0. After taking into account payments to employees totaling US$1.9

million, payments to suppliers and others totaling US$12.0 million, payments for financing costs totaling

US$3.4 million and payments for income tax totaling US$2,233.0, our net cash provided by operating activities

amounted to US$10.0 million in the three months ended March 31, 2014.

In 2014, receipts from customers totaled US$130.3 million and receipts of financing income totaled

US$32,751.0. After taking into account payments to employees totaling US$10.4 million, payments to suppliers

and others totaling US$59.7 million, payments for financing costs totaling US$14.9 million and payments for

income tax totaling US$11,667.0, our net cash provided by operating activities amounted to US$45.4 million in

2014.

In 2013, receipts from customers totaled US$95.5 million and receipts of financing income totaled

US$11,101. After taking into account payments to employees totaling US$10.5 million, payments to suppliers

and others totaling US$50.8 million, payments for financing costs totaling US$14.0 million and payments for

income tax totaling US$11,605.0, our net cash provided by operating activities amounted to US$20.2 million in

2013.

In 2012, receipts from customers totaled US$67.7 million and receipts of financing income totaled

US$18,601.0. After taking into account payments to employees totaling US$6.8 million, payments to suppliers

and others totaling US$41.6 million, payments for financing costs totaling US$11.2 million and payments for

income tax totaling US$2,482.0, our net cash provided by operating activities amounted to US$8.1 million in

2012.

Net Cash Used in Investing Activities

Net cash used in investing activities consists primarily of proceeds of fixed assets and non-current assets

held for sale offset by acquisitions of fixed assets and intangible assets.

Our net cash used in investing activities was US$14.7 million in the three months ended March 31, 2015,

which primarily related to the acquisition of fixed assets of US$14.6 million, consisting of cash outflows related

to the acquisition of two General Purpose vessels totaling US$12.1 million and the remainder for, among other

things, the construction of our shipyard and the purchase of corporate vehicles.

Our net cash used in investing activities was US$1.3 million in the three months ended March 31, 2014,

which primarily related to cash outflows for the construction of our shipyard.

Our net cash used in investing activities was US$52.6 million in the year ended December 31, 2014,

which primarily related to the acquisition of fixed assets of US$63.8 million, mainly consisting of cash outflows

related to the acquisition of two Aframax vessels totaling US$36.0 million and the remainder for, among other

things, the construction of our shipyard and the purchase of machinery and equipment for our shipyard, which

was partially offset by proceeds from the sale of a Medium Range vessel and an Aframax vessel totaling

US$11.2 million.

Our net cash used in investing activities was US$76.0 million in the year ended December 31, 2013,

which primarily related to the acquisition of fixed assets of US$75.9 million, mainly consisting of cash outflows

related to the acquisition of a VLCC, an Aframax vessel and a Medium Range vessel totaling US$54.6 million

and the remainder for, among other things, the construction of our shipyard.

Our net cash used in investing activities was US$52.5 million in the year ended December 31, 2012,

which primarily related to the acquisition of fixed assets of US$53.3 million, mainly consisting of cash outflows

related to the acquisition of an Aframax vessel, a General Purpose vessel, a Medium Range vessel and a barge

totaling US$28.5 million and the remainder for, among other things, the construction of our shipyard, which was

partially offset by proceeds from the sale of three General Purpose vessel totaling US$0.8 million.

Net Cash Provided by (used in) Financing Activities

Our net cash provided by financing activities was US$5.0 million in the three months ended March 31,

2015, primarily consisting of related party loans, partially offset by repayment of bank loans and payment of

financial charges.

Our net cash used in financing activities was US$7.8 million in the three months ended March 31, 2014,

primarily consisting of repayment of bank and related party loans and payment of financial charges, partially

offset by withdrawal of bank loans.

Our net cash provided by financing activities was US$25.5 million in 2014, primarily consisting of

borrowings under bank loans and proceeds from the initial public offering of our Company’s shares, partially

offset by repayments of bank loans and payment of financial charges.

Our net cash provided by financing activities was US$54.9 million in 2013, primarily consisting of

proceeds from the subscription of additional shares in our Company by a number of the principal shareholders

of our Company and withdrawal of bank loans, partially offset by repayments of bank loans and payment of

financial charges.

Our net cash provided by financing activities was US$43.8 million in 2012, primarily consisting of

borrowings under bank loans, partially offset by repayment of bank loans and shareholder loans and payment of

financial charges.

Capital Expenditures

Our capital expenditures are categorized under (i) shipping, (ii) shipyard and (iii) others. Our capital

expenditures for shipping primarily relate to the acquisition of vessels to replace retired vessels and expand our

fleet and supplies for our vessels, which include global positioning systems, navigation and communication

equipment and computer systems for vessel operations. Capital expenditures for our shipyard primarily relate to

expenditures for land, the construction and development of buildings and facilities on our shipyard and shipyard

machinery and equipment. Our other capital expenditures generally relate to the maintenance and repair of our

office facilities and equipment. To fund this capital expenditure, we have relied primarily on cash flows from

operations and bank borrowings under our existing credit facilities.

The following table sets forth our capital expenditures for the years ended December 31, 2012, 2013 and

2014:

Year Ended December 31,

2012

2013

2014

(US$) Shipping

Vessels........................................................................................................................... 28,446,258 54,571,088 36,029,490 Vessel supplies .............................................................................................................. 216,893 171,704 154,082

Shipyard ............................................................................................................................ 31,465,314 29,066,512 35,644,392 Others ................................................................................................................................ 1,658,081 229,374 535,788

We plan to monitor customer demand and expand our fleet by acquiring additional vessels to meet

forecasted customer demand. From time to time, we may also establish joint ventures or strategic partnerships

that we believe will complement our business. Some of these vessel acquisitions or investments in joint ventures

or strategic partnerships could be material. However, we currently do not have any committed capital

expenditure and currently have no specific agreements with respect to any vessel acquisition or investment.

Contractual Obligations and Commitments

The following table sets forth our contractual obligations and commitments based on undiscounted

contractual payments as of March 31, 2015:

Payment Due by Period

Less Than

1 Year

1-5 Years

More than

5 Years

Total

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (US$)

Trade payables................................................................................... 8,804,901 — — 8,804,901

Other payables ................................................................................... 1,193,213 — — 1,193,213 Accrued expenses .............................................................................. 9,809,955 — — 9,809,955 Short-term bank loans ........................................................................ 16,014,411 — — 16,014,411 Amounts due to related parties ........................................................... 17,140,723 — — 17,140,723 Long-term loans ................................................................................ 37,163,194 111,233,101 — 148,396,295

Total contractual obligations and commitments ............................ 90,126,397 111,233,101 — 201,359,498

Note: (1) Total of current and non-current portion.

Contingent Liabilities

Our contingent liabilities consists of liabilities under bid bonds and performance bonds used in our

shipping business and refund guarantees and warranty bonds used in our shipyard business.

For our shipping business, we typically are required to post a bid bond, amounting to 0.5% of the charter

contract value, whenever we submit a bid for a tender for a charter contract. In the event we win a tender, but

are unable to or elect not to proceed with performing the relevant charter contract, our prospective customer

under the tender is entitled to enforce payment under the bid bond. However, if we win a tender and proceed to

perform the relevant charter contract, our customer will release the bid bond and, save for Pertamina, we will

then be required to post a performance bond, typically amounting to 3.0% of the charter contract value that will

remain in place over the life of the charter contract. Our customer is entitled to enforce payment under the

performance bond if we fail to fulfill our obligations under the charter contract. We typically obtain both the bid

bonds and the performance bonds from facilities provided by Bank Mandiri and BCA. As of March 31, 2015,

the aggregate value of our outstanding bid bonds and performance bonds amounted to Rp.36.1 billion.

For our shipyard business, we are required to provide refund guarantees to our customers of amounts

equal to their payments made to us. As our shipyard customers generally make five scheduled payments to us,

consisting of a payment of 20.0% of the contract price of the particular newbuild at each of the five stages of

(i) contract signing, (ii) steel cutting, (iii) keel laying, (iv) launching and (v) delivery, after collection of the first

20.0% payment from a customer, we provide the same customer with the first refund guarantee of the same

amount. Such refund guarantee is exchanged for a refund guarantee for a correspondingly higher amount each

time the second, third and fourth payments are made to us. When the customer makes its last 20.0% payment

when taking delivery of the newbuild, the refund guarantee for 80.0% of the contract price will be exchanged

for a warranty bond, amounting to 3.0% of the contract price. In the event we fail to complete construction of

the newbuild, the customer is entitled to enforce payment under the refund guarantee. After taking delivery of

the newbuild, if the vessel does not perform as required under the newbuild contract within the first year of

delivery, the customer is entitled to enforce payment under the warranty bond. We typically also obtain both the

refund guarantees and warranty bonds from facilities provided by Bank Mandiri. As of March 31, 2015, the

value of our outstanding refund guarantees amounted to US$18.5 million. We do not have any outstanding

warranty bonds as we have yet to complete the construction of any newbuilds at our shipyard.

Off Balance Sheet Arrangements

Except for the contingent liabilities set forth above, as of March 31, 2015, we did not have any off-

balance sheet arrangements with unconsolidated entities.

Reclassification of Certain Line Items of the Consolidated Statement of Financial Position as of

December 31, 2014

We previously had a long-term bank loan from PT Bank International Indonesia Tbk (“BII”) and were

required to maintain an escrow account in BII. Prior to our full repayment of this long-term bank loan that was

due in May 2015 in December 2014, the US$14,729 that was deposited in this escrow account was presented in

our consolidated statement of financial position as “restricted cash.” Following such repayment, we reclassified

such amounts in this escrow account to “cash and cash equivalents” in our consolidated statement of financial

position as of March 31, 2015.

In addition, as of December 31, 2014, we viewed and accounted for our shipyard operations as one

activity of the same nature and, consequently, recorded “estimated earnings in excess of billings on

constructions contracts” and “billings in excess of estimated earnings on contracts” on an aggregate basis for our

shipyard operations. However, as of March 31, 2015, we determined that accounting for the two aforementioned

line items on a “per construction contract” basis would provide more detailed accounting information. As such,

the balances of these two line items as of December 31, 2014 have been reclassified to conform to the

presentation of the same in our consolidated statement of financial position as of March 31, 2015. See Note 36

to our consolidated financial statements included in this Updates.

The following tables sets forth the impact of the aforementioned reclassification on our consolidated

statement of financial position as of December 31, 2014:

As of the year ended December 31, 2014

As previously stated

Reclassification

As reclassified

(US$) Current Assets

Cash and cash equivalents ..................................................................... 20,351,494 14,729 20,366,223 Restricted cash ...................................................................................... 404,627 (14,729) 389,898 Estimated earnings in excess of billings on contracts ............................. — 1,986,813 1,986,813

Current Liability

Billings in excess of estimated earnings on contracts ............................. (6,252,504) (1,986,813) (8,239,317)

Quantitative and Qualitative Disclosures about Market Risks

Our business exposes us to a variety of financial risks, including changes in foreign exchange rates, credit

risk and liquidity risk. The following discussion summarizes our exposure to foreign exchange rates, credit risk

and liquidity risk and our policies to address these risks. The following discussion contains forward-looking

statements that are subject to risks, uncertainties and assumptions about us. These statements are based upon

current expectations and projections about future events. There are important factors that could cause our actual

results and performance to differ materially from such forward-looking statements, including those risks

discussed under “Risk Factors.”

Liquidity Risk

We are subject to the risk that we will not have sufficient funds to meet our operating requirements and

financial obligations when they fall due. We manage our liquidity risk by maintaining cash flows generated

from our operations and ensuring the availability of credit facilities, managing credit terms and maintaining

stringent collection policies.

Interest Risk

We operate in a capital intensive industry and frequently fund our operations through medium to long-

term debt, including bank loans with floating interest rates. As a result, our results of operations may be affected

by fluctuations in interest rates and the amount of our outstanding loans. We do not currently have any hedging

arrangements or interest-rate swaps to adjust interest-rate risk exposures, but we may enter into such

arrangements or swaps in the future in order to hedge our interest rate risk.

Although we expect the U.S. dollar to continue appreciating against the Rupiah, we are and also expect to

continue to be subject to risk of fluctuations in the exchange rate between the U.S. dollar and the Rupiah. We

currently do not engage in any formal hedging activities against foreign exchange rate risks but intend to

continue to monitor the movement in U.S. dollar/Rupiah exchange rate and enter into hedging arrangements as

and when we deem appropriate.

Recent Accounting Pronouncements There are no new issued accounting standards by the Indonesian Financial Accounting Standards Board

(“DSAK”) that are considered relevant to our financial reporting but not yet effective for consolidated financial

statements included in this Updates.

BUSINESS

Overview

We are the largest independent tanker owner and operator in Indonesia in terms of DWT capacity, as of

March 31, 2015, according to Drewry, providing crude oil, petroleum products and LPG shipping services and

shipyard services principally to companies operating in the domestic oil and gas and chemical sectors. As of

March 31, 2015, we owned and operated a total of 35 vessels with an aggregate capacity of 1.3 million DWT, of

which 34 were Indonesian-flagged tankers, including 18 oil tankers, of which two are the only Indonesian-

flagged VLCCs, 12 chemical tankers, three gas tankers and two FSO tankers. We also operate a shipyard the

first phase of which comprises a total land area we estimate is approximately 50 hectares and has a coast line of

1.3 kilometers, and which commenced providing shipbuilding services in 2012. We also intend to offer ship

repair and maintenance services to third parties and to our own vessels after the completion of our floating dry

dock, which is currently under construction.

We operate two principal lines of business: shipping services and shipyard services. Our shipping

business is divided into two main segments based on the contract arrangements under which our vessels are

chartered to customers, namely time charters and spot charters. We currently conduct shipbuilding operations at

our shipyard and, after the construction of our planned floating dry dock is complete, we expect our shipyard to

be capable of receiving orders for maintenance and repair and oil and gas fabrication.

We undertake the commercial and operational management of our charters and fleet, including

commercial strategy, commercial and financial management, acquisition and disposal of vessels, chartering and

the development of new business opportunities. We have entered into contracts with our affiliates, PT Equator

Maritime and PT Vektor Maritim, to provide technical management services for our vessels, and in practice

such services include managing compliance with regulatory and classification standards in respect of our vessels

and the selection and employment of marine crew that operate our vessels. We supervise the performance of the

services provided by our technical managers.

The following table sets forth our net revenue breakdown over our two principal lines of business for the

periods indicated and as a percentage of total net revenue for our business:

Years Ended December 31,

Three Months ended March 31,

2012

2013

2014

2014

2015

(Unaudited) (US$ except percentages)

Net Revenues Shipping

Charter(1) .............. 52,783,473 73.9 % 61,696,073 58.0% 65,292,539 51.2% 17,931,686 68.4% 20,110,518 59.2%

Spot ...................... 18,172,124 25.5 % 40,801,995 38.3% 42,095,486 33.0% 5,959,189 22.7% 7,526,173 22.2%

Shipyard .................... 435,876 0.6 % 3,906,506 3.7% 20,089,361(1) 15.8% 2,321,333 8.9% 6,317,425(1) 18.6%

Total ......................... 71,391,473 100.0% 106,404,574 100.0% 127,477,386 100.0% 26,212,208 100.0% 33,954,116 100.0%

Note:

(1) Includes revenue from related parties.

Our business benefits from Indonesian cabotage laws that mandate the use of Indonesian-flagged vessels

for domestic sea freight transportation, particularly to support the national oil and gas downstream industry in

the seaborne distribution of crude oil, petroleum products and LPG around the more than 13,000 islands that

comprise the Indonesian archipelago. As of March 31, 2015, our 34 Indonesian-flagged tankers had a total

capacity of 1.3 million DWT and our two VLCCs currently transport crude oil from Middle East producers to

refineries for processing.

Our largest customer, Pertamina, the state-owned oil company operating nine refineries around Indonesia,

has been a customer of our predecessor companies since we commenced operations in 1981. Our vessels

chartered to Pertamina are principally engaged in time charters and, for the years ended December 31, 2012,

2013 and 2014, and the three months ended March 31, 2015, respectively, shipping services provided to

Pertamina accounted for 68.2%, 46.3%, 52.4% and 53.2% of our net revenues. We also provide shipping

services to ConocoPhillips, an international major oil company operating in Indonesia, and PLN, the state-

owned electricity company.

As demand for shipping services provided by domestic operators in Indonesia has increased, we have

sought to increase the number of vessels and the total capacity of our fleet through the acquisition of well-

constructed and well-maintained pre-owned vessels, principally from the European market, which we then re-

flag to become Indonesian-flagged vessels. Our total vessel capacity has increased from 568,184 DWT in 2010

to 1.3 million DWT in 2014, representing a CAGR of 23.8%. Pertamina, our major customer, determines its

charter rates based on, among other things, market rates, previous contracts, the investment required if it were to

use its own fleet and its internal budget. Our time charter rates with Pertamina fluctuate less frequently than time

charter rates in the international market. We believe that Pertamina’s demand for reliable seaborne

transportation to distribute crude oil, petroleum products and LPG around the Indonesian archipelago allows us

to realize steady rates of return on our investment in the acquisition and operation of our vessels and allows us

to utilize these vessels for extended periods of time until the cost of continued docking and maintenance exceeds

our expected returns on continuing time charter.

Our vessel deployment strategy is designed to provide stable cash flow through the use of long-term time

charters for a significant portion of our fleet, in terms of DWT capacity, while maintaining a diversified fleet to

serve sectors of the oil and gas and chemical industry that typically use spot charters. As of April 30, 2015, our

remaining contracted revenues for time charters amounted to US$236.1 million, of which US$92.2 million

relates to revenues from optional extension periods, and our time charter contracts had a weighted average

remaining life of 5.6 years weighted by contract value, including any optional extension periods. For the years

ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015, our net revenues from

shipping services were US$71.0 million, US$102.5 million, US$107.4 million and US$27.6 million, accounting

for 99.4%, 96.3%, 84.2% and 81.4% of our total net revenues, respectively.

In 2012, we commenced new shipbuilding operations at our shipyard located in a Free Trade Zone in

Karimun, Indonesia in the Malacca Straits, an international shipping route, and nearby Singapore, which has a

developed maritime industry. Our shipyard has a coastal depth of 12.0 meters and provides shipbuilding services

for vessels of various carrying capacities. We currently have an orderbook of five new ships under construction,

with completion and deliveries scheduled to occur between late 2015 and 2017. We also have a 50,000 DWT

floating dry dock scheduled to complete construction and enter operation in the fourth quarter of 2015, from

which we expect to provide ship repair and maintenance services for our fleet and other vessels. We believe that

the Free Trade Zone provides our shipyard with advantages on the import of materials and spare parts, including

tax-free status and expedited customs clearance, which will allow us to compete effectively on cost and timing

of shipbuilding, maintenance and repair services. For the years ended December 31, 2012, 2013 and 2014, and

the three months ended March 31, 2015, our net revenues from shipyard services were US$0.4 million, US$3.9

million, US$20.1 million and US$6.3 million, accounting for 0.6%, 3.7%, 15.8% and 18.6% of our total net

revenues, respectively.

Our net revenue has grown from US$71.4 million to US$127.5 million between the years ended

December 31, 2012 and 2014, representing a CAGR of 33.6%, and for the three months ended March 31, 2015

was US$34.0 million. Our EBITDA has grown from US$32.5 million to US$60.3 million between the years

ended December 31, 2012 and 2014, representing a CAGR of 36.2%, and for the three months ended

March 31, 2015 was US$15.3 million.

Competitive Strengths

We believe that, as the largest independent tanker owner and operator in Indonesia, we have the following

competitive strengths:

Leadership and established track record in the Indonesian crude oil, petroleum products and LPG shipping

industry

We are the largest independent tanker owner and operator in Indonesia in terms of DWT capacity, as of

March 31, 2015, according to Drewry. We have a long operating history and established track record in growing

our fleet and revenue. Since the inception of our business operations in 1981, we have grown the size of our

fleet and, as of March 31, 2015, we owned and operated a total of 35 vessels with a total capacity of 1.3 million

DWT, including 18 oil tankers, of which 2 are VLCCs, 12 chemical tankers, 3 gas tankers and 2 FSO tankers.

Two of our gas tanker vessels were acquired in March 2015 and are engaged in time charters with Pertamina. In

addition, oil and gas consumption in Indonesia has grown over the recent years as has the demand for maritime

shipping services in this sector.

We believe the size of our fleet, together with our mix of vessels, comprising oil tankers, chemical

tankers, gas tankers and FSO tankers, allows us to provide comprehensive shipping solutions to our customers

engaged in various segments of the oil and gas and chemical production and supply chain. The size of our fleet

also enables us to maintain a highly competitive cost base and enjoy economies of scale in respect of insurance,

employees, repair and maintenance, and other cost items. We place marine insurance on a collective basis and,

as a consequence of both the size and operational history of our fleets, are able to secure insurance cover at

competitive rates with reputable insurers. We believe our technical managers provide us with a qualified marine

crew that operates our vessels and to whom we and our technical manager provide periodic training and retain

on a repeated basis, which enables us to keep our employment costs at a competitive level. Our ability to obtain

funding to acquire vessels allows us to respond to customer demands and win tenders for shipping contracts. We

actively manage the deployment of our fleet between time charters and spot charters, and our fleet size and

vessel mix affords us both the opportunity to capitalize on high “spot” market rates and the ability to respond to

changing demand for different vessel types that result from fluctuations in demand for various chemical

products, while achieving high utilization rates and stable cash flow. For the years ended December 31, 2012,

2013 and 2014, and the three months ended March 31, 2015, our fleet-wide utilization rates were 95.9%, 98.1%,

88.1% and 89.2%, respectively.

Recurring revenue and cash flow visibility driven by contracted time charters

As of March 31, 2015, 19 of our vessels, comprising 87.2% of our aggregate DWT capacity, were

chartered to customers under time charters, with initial charter periods ranging from three months to ten years

with the option to extend for additional periods. Our time charters provide us with highly-visible and stable cash

flows to fund our operations and debt service. The majority of our time charter contracts are with creditworthy

major oil and gas and chemical companies, including Pertamina and ConocoPhillips. As of April 30, 2015, our

remaining contracted revenues amounted to US$236.1 million, of which US$92.2 million relates to revenues

from optional extension periods, and the weighted average remaining life of our time charters was 5.6 years

weighted by contract value, including any optional extension periods.

Our time and spot charter contracts are based on standard industry forms with customary terms and are

denominated either in U.S. dollars or the Rupiah-equivalent of U.S. dollars. In accordance with industry

practice, we do not pay for voyage expenses, such as bunker fuel costs and port charges, on our time charters, as

the customer pays for voyage expenses directly, and we pay voyage expenses for our spot charters. Our

operating expenses for time charters are mainly limited to ship maintenance and repair. Our payments for the

acquisition of vessels to expand our fleet, and for ongoing operation and maintenance of our fleet, are

principally denominated in U.S. dollars. As a result, the currency which primarily influences our revenues and

expenses, and the currency of the primary economic environment in which we operate — our functional

currency — is U.S. dollars. Since we expand our fleet through the acquisition of pre-owned vessels, we are not

committed to fund progress payments on new-build vessels. We conduct comprehensive vessel inspections and

reviews of the vessels’ classification certification records to ensure the vessels we acquire are well-constructed

and maintained and meet our customers’ requirements. We believe we enjoy predictable margins on our vessels

because a high percentage of our fleet in terms of DWT capacity is engaged in time charter contracts, and we

use well-constructed and maintained pre-owned vessels, which limits our operating expenses for repair and

maintenance.

For the years ended December 31, 2012, 2013 and 2014, and the three months ended March 31, 2015, our

EBITDA margin was 45.6%, 41.7%, 47.3% and 45.0%, respectively. We also believe that Pertamina’s demand

for reliable seaborne transportation to distribute gasoline, diesel and jet fuel around the Indonesian archipelago

allows us to realize steady rates of return on our investment in the acquisition and operation of our vessels. We

have experienced a stable rate of option extensions and renewals of our time charter contracts as, in our

experience, our customers prefer to continue use of incumbent vessels rather than locate and contract a time

charter with a new vessel.

Established reputation and long-standing relationships with Pertamina and other large customers

Since the inception of our business in 1981, we have established a strong reputation in the oil and gas and

chemical shipping industry and believe that we are widely known among participants in the industry for our

good quality service and high customer satisfaction. Our efforts to ensure that we provide our customers with

high quality service have earned us various quality certifications, including the Certificate of International

Safety Management from International Maritime Organization, the Tanker Management Self Assessment

Certificate from the Oil Companies International Marine Forum and ISO 9001:2008 and ISO 14000 for quality

control management for shipping companies. These certifications, as well as the ship classifications awarded by

international and domestic ship classification bureaus, have allowed us to participate in the ship tender processes

for major domestic and international oil and gas companies. Our technical managers provide us with a qualified

marine crew for whom we and our technical manager provide periodic training. We believe that our reputation

for providing dependable, safe and efficient shipping services has allowed us to develop and maintain

relationships with major oil and gas companies including Pertamina, ConocoPhillips and Camar Resources. We

have worked closely with Pertamina, the state-owned oil company operating nine refineries around Indonesia

and which accounts for a substantial amount of oil and chemical products produced and shipped within

Indonesia, for 35 years and is currently the largest provider of oil and gas and chemical shipping services to

Pertamina. We believe that our long-standing relationships with our customers have allowed us to better

understand and meet our customers’ needs and enabled us to maintain a competitive edge over other domestic

shipping companies.

Rising energy demand and high barriers of entry resulting in favorable industry dynamics

Demand for oil and gas and other chemical products has been growing in Indonesia over recent years. As

Indonesia is an archipelago comprised of more than 13,000 islands, the bulk of such products are transported to

various points of consumption by sea. According to Drewry, a consistent growth in the past decade in

Indonesia’s economy has been followed by commensurate growth in Indonesia’s energy consumption.

Indonesia’s energy consumption has grown at a CAGR of 4.2% in the last five years growing from 877 million

barrels of oil equivalent in 2007 to 1,079 million barrels of oil equivalent in 2012.

The Government’s current plans to implement a sea lane transportation system (the “Sea Toll Program”)

where major domestic sea lanes are lined with well-developed ports so as to provide for, among other things,

more efficient cargo loading and unloading services for vessels, is expected to further boost seaborne

transportation. The Indonesian tax regime is also favorable to our shipping business as foreign companies are

subject to final tax of up to 20% on charter fees, while Indonesian companies are only subject to a 1.2%

withholding tax, allowing us to gain a competitive advantage.

As a result of the implementation of the cabotage principles into Indonesian shipping laws, which was

part of the Government’s efforts to support domestic shipping companies, and the limitation on foreign

investment in Indonesian shipping companies, competition from foreign shipping companies is limited. With the

implementation of cabotage principles into Indonesian shipping laws, there has been an increase in the number

of Indonesian-flagged vessels and a decrease in foreign-flagged vessels operating in Indonesian waters.

According to Drewry, between 2006 and 2013, the number of Indonesian-flagged vessels increased from 6,428

to 13,120 at a CAGR of 10.7% and the aggregate DWT capacity of Indonesian-flagged vessels increased from

2.9 million DWT to 8.2 million DWT at a CAGR of 16.0%. The size of our fleet has grown steadily in the years

following the implementation of Indonesian cabotage laws as we benefited from the aforementioned favorable

industry dynamics and our position as one of the few domestic shipping companies with the Indonesian-flagged

DWT capacity to meet the demands of Pertamina and our other customers in the Indonesian oil and gas and

chemical industry for reliable seaborne transportation to support the production and distribution of gasoline,

diesel and jet fuel around the Indonesian archipelago to meet the rising energy demand in Indonesia.

We believe we are well positioned to capture additional growth opportunities for our business as, under

cabotage principles, domestic companies are required to use Indonesian-flagged vessels for domestic routes. The

Indonesian tax regime is also favorable for international routes as foreign companies are subject to withholding

tax of up to 20% on charter fees, while Indonesian companies are only subject to 1.2% final tax. Prospective

participants in our industry also face barriers of entry, including high capital expenditure involved with

acquiring Indonesian flagged vessels and the relatively low availability of skilled and experienced Indonesian

seafarers, whom shipping companies are legally required to use to operate Indonesian flagged vessels. In

addition, a significant proportion of vessel charterers generally enter into long term charter contracts and prefer

to continue using incumbent vessels rather than locate and contract a time charter with a new vessel provided

the operator continues to meet performance standards. As such, our long-standing relationships with our

customers, including Pertamina, our largest customer and the state-owned oil company operating nine refineries

around Indonesia, has also further allowed us to leverage these favorable industry dynamics. We believe that our

strong track record in providing Pertamina and our other customers with shipping services and their familiarity

with us has allowed us to maintain a stable and high utilization rate of our vessels and a high rate of renewal or

re-contracting of our time charters. As of December 31, 2012, 2013 and 2014 and March 31, 2015 the number of

vessels in our fleet on time charters with Pertamina was 16, 18, 15 and 15, respectively.

Complementary shipyard to provide a new stream of recurring revenue and additional cost competitiveness

In 2012, we expanded into a new line of business that is also complementary to our shipping business

when we commenced shipbuilding services at our shipyard. We expect to commence operations of our floating

dry dock, which has a planned capacity of 50,000 DWT, in the fourth quarter of 2015 and will allow us to offer

ship repair and maintenance and other shipyard services. We believe ship repair and maintenance provides a

recurring revenue stream, as international classification societies require that vessels conduct an internal

inspection every five years and an intermediate inspection approximately every 2.5 years.

Our shipyard is in close proximity to Singapore and is strategically located in a Free Trade Zone in the

Malacca Strait, one of the busiest international shipping lanes in the world. The first phase of our shipyard has a

total land area we estimate is 50 hectares. Our shipyard benefits from deep surrounding water of up to

12.0 meters in coastal depth, and will be able to accommodate the docking of up to 40 vessels per year and the

construction of up to seven vessels simultaneously and construction of several vessels each year. As our

shipyard is located in a Free Trade Zone, we enjoy various tax, custom and excise incentives, including the

expeditious clearance of customs for imported construction materials and equipment and exemption from

custom duties, lowering our cost incurred for shipbuilding and providing repair and maintenance services and

increasing our competitiveness against shipyards located outside of Free Trade Zones. We commenced

providing shipbuilding services in 2012 and offer complete design and construction services for vessels of

various specifications and functions, including oil tankers, floating storage offloading vessels and other marine

vessels. As of March 31, 2015, we had five vessels under construction, including three 17,500 DWT oil tankers

for Pertamina under three different agreements that we entered into in 2013 and 2014 and two oil tankers under

construction for our affiliates (under agreements that are pending execution), which we intend to charter-in

following delivery and acceptance by our affiliates. We also intend to offer ship repair and maintenance services

to third parties and to our own vessels after the completion of our floating dry dock. We believe that our

shipyard will allow us to provide additional services to our long-standing customers, such as Pertamina, as well

as providing repair and maintenance services to our own vessels, which we expect will result in higher operating

margins and less down time for our vessels.

Highly experienced management team and well-trained and qualified crew

We have an experienced management team with extensive experience and expertise in the shipping

industry, covering all areas of shipping operations, including vessel acquisition, sales and marketing, operational

planning, cost management and recruitment and training of crew. The majority of the members of both our

Board of Commissioners and Board of Directors have more than a decade of working experience in the shipping

industry and a number of our commissioners and directors have more than 30 years of working experience in the

shipping industry. As a result, our management team enjoys strong relationships with various key stakeholders

in the domestic shipping industry, including the Indonesia maritime authorities, Indonesia state-owned oil and

gas companies, and domestic shipping industry associations, such as INSA and IPERINDO, which is critical to

maintaining our long-standing relationships with customers. In addition, our technical managers provide us with

a qualified marine crew, with more than 725 contracted seafarers as of March 31, 2015, to whom we and our

technical managers provide periodic training on international standards for the safety and operation of our

vessels. We have been able to achieve a strong track record of improving financial performance through a well-

trained and qualified crew, our strong understanding of the domestic shipping industry, underpinned by over 30

years of operational experience and interaction with key stakeholders in the domestic shipping industry and our

acquisition of well-constructed and maintained pre-owned vessels that meet our customers’ demands. Our net

revenue has grown at a CAGR of 33.6% over the years ended December 31, 2012, 2013 and 2014, where our

revenue for the same periods amounted to US$71.4 million, US$106.4 million and US$127.5 million,

respectively. Over the same periods, we also enjoyed stable EBITDA margins, which were 45.6%, 41.7% and

47.3%, respectively.

Strategies

We intend to continue increasing our revenue and market share through the following key strategies:

Expand our fleet and maintain an optimal fleet mix

Demand for crude oil, petroleum products and LPG shipping by oil and chemical suppliers have had and

are expected to continue to have a significant impact on our results of operations. Indonesian domestic demand

for oil and gas and chemical products has been growing over the recent years. We expect that increasing demand

for oil and gas products in Indonesia, supported by the Indonesian cabotage laws, will increase demand for

Indonesian flagged vessels over the coming years. With the implementation of cabotage principles into

Indonesian shipping laws, there has been an increase in the number of Indonesian-flagged vessels and a decrease

in foreign-flagged vessels operating in Indonesian waters. According to Drewry, between 2006 and 2013, the

number of Indonesian-flagged vessels increased from 6,428 to 13,120 at a CAGR of 10.7% and the aggregate

DWT capacity of Indonesian-flagged vessels increased from 2.9 million DWT to 8.2 million DWT at a CAGR

of 16.0%. The domestic movement of fuel oil has also increased from 61.6 million tons in 2010 to 72.0 million

tons in 2013, with a CAGR of 5.3%, according to Drewry. We intend to monitor the market for pre-owned

vessels and acquire well-constructed and maintained pre-owned vessels that meet our selection criteria to grow

our fleet. To achieve timely settlement of opportunities to acquire pre-owned vessels, we frequently bridge the

acquisition cost with cash on hand or with loans from our shareholders and then refinance the vessel with debt

capital post acquisition. We intend to continue to practices and financial management and prudently acquire

vessels in view of market intelligence on future vessel requirements of our customers, our financing options and

our expected return on the vessel to be purchased. We also plan to optimize our marketing and administrative

functions so as to streamline the tender process for new charter contracts, which often requires long

documentation processes.

Increase market share by taking advantage of favorable industry dynamics

We intend to capitalize on the favorable dynamics for our Company in the Indonesian oil and gas and

chemical shipping industry and take advantage of growing Indonesian demand for production and distribution of

gasoline, diesel, jet fuel and chemicals, as well as the implementation of cabotage principles into Indonesian

shipping laws, to increase our market share. We intend to leverage the favorable Indonesian tax regime, under

which Indonesian entities enjoy a competitive advantage over the foreign entities by virtue of being subject to a

significantly lower final tax of 1.2% on charter fees as opposed to the up-to-20.0% withholding tax that the

foreign entities are subject to. We also believe our market position makes us an attractive joint venture partner

for foreign investors in Indonesia, and we actively seek to engage in strategic alliances with foreign companies

so as to leverage their technical expertise and increase our opportunities to participate in joint tenders for long-

term time charter contracts to provide high DWT capacity vessels to Pertamina and other companies. We also

intend to capitalize on our position as one of the few domestic shipyards in an active international maritime

route to capture a market share of recurring maintenance and repair service contracts upon the completion of our

floating dry dock.

Maintain prudent financial management

We intend to maintain prudent financial management practices to allow for long-term sustainable growth

through organic expansion, such as by strategically acquiring well-constructed and maintained pre-owned

vessels to fill immediate demand in the market, and income diversification, such as by expanding into the

shipyard business. We conduct comprehensive financial planning and budgeting regularly to ensure proper

capital management and resource allocation and maintain conservative capital expenditure practices to ensure

that we have adequate resources and financing to support growth, especially with respect to the prudent

acquisition of vessels to expand our fleet.

Maintain relationships with major customers and expand customer base

We intend to continue to strengthen our long-standing relationships with Pertamina and our other

customers by seeking ways to increase our level and scope of services we currently provide to them. We

expanded our relationship with Pertamina beyond shipping services when we commenced construction of three

17,500 DWT oil tankers for Pertamina at our shipyard in 2013 and 2014, and also intend to seek opportunities to

provide ship repair and maintenance services for Pertamina’s own vessel fleet. We believe our market position

makes us an attractive joint venture partner, and we are actively seeking to engage in strategic alliances with

foreign companies so as to leverage their technical expertise and increase our opportunities to participate in joint

tenders for long-term time charter contracts to provide high DWT capacity vessels to Pertamina and our other

major Indonesian customers. Our sales teams actively manage our relationships with our major customers in

order to better understand their maritime logistics requirements and ensure high renewal rates on existing time

charters and win new contracts. We also seek to leverage our reputation for meeting the maritime safety and

operating standards of our major domestic and international oil and gas customers to attract new customers who

require high-quality Indonesian-flagged shipping services.

Enhance competitiveness through increasing operational efficiency and maintaining high safety standards

We seek to increase our operational efficiency by actively managing and lowering our cost of revenue and

operating expenses. Upon completion of our floating dry dock, we expect to provide in-house repair and

maintenance services for a portion of our fleet which will result in lower maintenance costs, less time in dry

dock and higher operating margins for our vessels. As the capital expenditures and other costs for maintaining a

vessel in good operating condition increase with the age of the vessel, and older vessels typically have lower

utilization rates due to their higher maintenance requirements, we closely monitor our vessel repair and

maintenance costs, which comprise the largest component of our vessel operational expenses, other than bunker

fuel. We typically replace vessels when they require dry docking and the cost of further repair and maintenance

of the vessel exceeds the price of acquiring a similar vessel on the pre-owned market. We also intend to focus on

maintaining our high safety standards through, among others, ensuring that our vessels are always certified safe

and seaworthy in accordance with all applicable rules and regulations, including certificate of class for hull and

machinery, international safety management, international ship and port facility security and maritime labor.

Our maintenance, including replacement of parts, is performed according to pre-established schedules,

regardless of whether the vessel or parts show any signs of defects. We plan to maintain our internal controls

with respect to management, quality control, environmental and safety. We believe that maintaining such best

practices will, increase the effectiveness of our employees, improve the efficiency of our business and increase

our ability to execute our business strategies and remain competitive and improve our overall business

performance.

Develop human capital and maintain high service reliability

As Indonesian law requires that Indonesian-flagged-vessels be operated by Indonesian crews, we believe

that it is critical to have a skilled work force composed of Indonesian seafarers. We intend to continue our

practices, together with our technical managers, to invest in and provide periodic training for the marine crew

that operates our vessels on international standards for safety and operation, so as to, among other things, allow

us to align the marine crew’s day-to-day actions with our strategic business objectives and increase the quality

of service we provide to our customers. We also expect to continue to train the marine crew, together with our

technical managers, to maintain strong vessel safety records, and maintain compliance with domestic and

international rules and regulations for the shipping industry. We expect to continue to place a strong emphasis

on technical management, particularly in the areas of health, safety, security and the environment, and crewing

and maintenance of vessels, all of which is designed to help our work force deliver high-quality service to our

customers.

History

Our company was established in Indonesia in 1981 with the establishment of our first operating company,

PT Armada Bumi Pratiwi Lines, to engage in marine transportation operating in domestic and international

waters. We began as an oil and gas subcontractor for Pertamina and, particularly with the implementation of

cabotage principles to the Indonesian shipping laws in 2005, have grown to provide end-to-end transportation

services to the oil and gas industry in Indonesia. In 2010, our group underwent a voluntary corporate

restructuring, establishing Soechi Lines. as a holding company with ten operating companies incorporated in

Indonesia, Singapore and Panama. In December 2014, the group completed an initial public offering and listed

its shares on the Indonesia Stock Exchange under the symbol “SOCI.”

Since commencing operations, we have continued to grow our fleet through the strategic acquisition of

vessels to meet the demands of the oil and gas and chemical shipping industry in Indonesia. In 2005, the

Government began implementing cabotage laws, which mandate the use of Indonesian-flagged vessels for

domestic sea freight transportation, particularly to support the national oil and gas downstream industry in the

seaborne distribution of diesel, gasoline and jet fuel products in Indonesia. The size of our fleet in terms of

number of vessels and overall DWT capacity has grown rapidly in the years following the implementation of

Indonesian cabotage laws as we capitalized on the demand for Indonesian-flagged vessels.

The following graph shows the growth in our fleet capacity by DWT (in thousands) since 2001:

In 2009, we commenced an expansion of our operations into shipyard and supporting services with the

construction of our shipyard in the Free Trade Zone in Karimun, Riau Islands, Indonesia, located about

80 kilometers from Singapore in the Malacca Strait, one of the world’s busiest international shipping lanes. The

shipyard allows us to offer shipbuilding, ship repair and oil and gas fabrication, including block fabrication,

outfitting and provision of parts for offshore oil platforms. Our company commenced shipbuilding activities in

2012 with orders to build oil tankers, and, upon the completion of our 50,000 DWT floating dry dock, which we

expect to commence operations in the fourth quarter of 2015, we intend to commence offering ship repair and

oil and gas fabrication.

Corporate Structure The following chart sets forth our current corporate structure:

Shipping Business

We provide marine transportation services to domestic and international companies, primarily operating

in the oil and gas and chemical industry in Indonesia. We are involved in the transportation of crude oil,

petroleum products and LPG, serving the entire chain of production and supply in the oil and gas and chemical

industry in Indonesia and imports of crude oil internationally. We utilize our diversified fleet of Indonesian-

flagged vessels to transport raw materials and finished products between production sites, refineries and storage

depots throughout the Indonesian archipelago, benefitting from the cabotage principle into Indonesian shipping

laws, which limit competition from international shipping companies. We believe the implementation of

Indonesian cabotage principle, the Government’s efforts to support the growth of domestic shipping companies,

has provided us a competitive advantage in winning time charter contracts, as it has led to domestic and

international oil and gas and chemical companies operating in Indonesia to convert from using internationally

flagged-vessels to Indonesian-flagged vessels.

Fleet Overview

As of March 31, 2015, we operated a fleet of 35 vessels, including two VLCCs, with total capacity of

1.3 million DWT. As of March 31, 2015, our fleet comprised of 18 oil tankers, 12 chemical tankers, 3 gas

tankers and 2 FSO tankers.

The following table provides an overview of our fleet as of March 31, 2015(1):

No.

Vessel Name

Year Built

Year acquired

Capacity (DWT)

Type

Category

Single or

Double Hull

Flag

Contract

type

Classification

Society

1. KM. Soechi Anindya 1971 1984 4,992 Oil Tanker General Purpose

Single Indonesia Spot BKI

2. KM. Angelia XVI 1995 1995 3,546 Oil Tanker General Purpose

Single Indonesia Time BKI

3. KM. Golden Pearl XIV 1995 1995 6,715 Oil Tanker General Purpose

Single Indonesia Time BKI

4. KM. Stephanie XVIII 1993 1995 1,585 Oil Tanker General Purpose

Single Indonesia Time BKI

5. KM. Silvia XII 1984 1999 3,302 Oil Tanker General Purpose

Single Indonesia Spot BKI

6. KM. Soechi Prestasi 1992 2001 1,544 Chemical Tanker General Purpose

Double Indonesia Time BKI

7. KM. Soechi Chemical I 1984 2002 1,176 Chemical Tanker General Purpose

Double Indonesia Spot BKI

8. KM. Soechi Chemical III 1985 2003 1,498 Chemical Tanker General Purpose

Double Indonesia Spot BKI

9. KM. Soechi Chemical V 1983 2003 1,813 Chemical Tanker General Purpose

Single Indonesia Spot BKI

10. KM. Soechi Chemical VII 1989 2004 4,410 Chemical Tanker General Purpose

Single Indonesia (in tender process)

BKI

11. KM. Soechi Pratiwi 1980 2004 5,280 Oil Tanker General Purpose

Single Indonesia Spot BKI

12. KM. Alisa XVII 1989 2006 29,490 Oil Tanker Medium Range

Single Indonesia Time BKI

13. KM. Soechi Chemical XIX 1984 2007 4,901 Chemical Tanker General

Purpose Single Indonesia Spot BKI

14. KM. Soechi Chemical IX(2) 1987 2008 4,410 Chemical Tanker General

Purpose Single Indonesia Spot BKI

15. KM. Soechi Chemical XXI 1986 2008 2,235 Chemical Tanker General Purpose

Single Indonesia Spot BKI

16. KM. Alice XXV 1993 2009 4,814 Oil Tanker General Purpose

Single Indonesia Time BKI

17. KM. Alina XXIII(2) 1992 2009 96,920 Oil Tanker Aframax Double Indonesia (in tender

process) BKI

18. KM. Andriana XX 1994 2010 2,297 Oil Tanker General Purpose

Single Indonesia Time BKI

19. KM. Gas Soechi XXVIII 1994 2010 3,930 Gas Tanker General Purpose

Double Indonesia (in tender process)

NKK

20. KM. Arenza XXVII 2000 2010 308,595 Oil Tanker VLCC Double Indonesia Time LR

21. KM. Almira XXII 1993 2010 2,254 Oil Tanker General Purpose

Single Indonesia Time BKI

22. KM. Soechi Asia XXIX 1994 2011 6,312 Chemical Tanker General Purpose

Double Indonesia Spot NKK

23. KM. Asumi XXVI 1990 2011 6,320 Oil Tanker General Purpose

Single Indonesia Time BKI

24. KM. Success Total XXXI 1992 2011 47,100 FSO Tanker Medium Range

Double Indonesia Time LR

25. KM. Success Energy XXXII 1995 2011 7,902 Chemical Tanker General Purpose

Single Indonesia Spot NKK

No.

Vessel Name

Year Built

Year acquired

Capacity (DWT)

Type

Category

Single or

Double Hull

Flag

Contract

type

Classification

Society

26. KM. Success Victory XXXIV

1999 2012 6,576 Chemical Tanker General Purpose

Double Indonesia Spot NKK

27. KM. Success Pioneer XXXV 1996 2012 96,183 FSO Tanker Aframax Double Indonesia Time DNV GL

28. KM. Success Marlina XXXIII

2000 2012 16,476 Chemical Tanker General Purpose

Double Panama Spot NKK

29. KM. Success Fortune XL 2002 2013 298,555 Oil Tanker VLCC Double Indonesia Time DNV GL

30. KM. Success Challenger

XXXVII 1997 2013 98,880 Oil Tanker Aframax Double Indonesia Time ABS

31. KM. Success Pegasus XXXVI

1998 2013 43,760 Oil Tanker Medium Range

Double Indonesia Time DNV GL

32. KM. SC Champion XLV 2000 2014 109,325 Oil Tanker Aframax Double Indonesia Time LR

33. KM. Fortune Villa XLIII 1998 2014 99,999 Oil Tanker Aframax Double Indonesia Time Rina

34. KM. Eternity XLVII 1996 2015 4,285 Gas Tanker General Purpose

Single Indonesia Time NKK

35. KM. Discovery XLVI 1996 2015 3,499 Gas Tanker General Purpose

Double Indonesia Time NKK

Note: (1) The table does not include vessels acquired after March 31, 2015, namely KM Fortune Pacific XLIX or KM Success Dalia XLVIII.

(2) As of the date of this Offering Memorandum, these vessels are not in operation and do not posses certification by classification societies.

We also own three other vessels, which consist of two barges and one tug boat, and are used as part of our

internal operations and are not chartered to customers. In addition, our affiliates, PT Adiraja Armada Maritime

and PT Global Karya Indonesia own two vessels that we charter-in on a regular basis for our shipping business,

all of which are General Purpose vessels chartered-in under time charters. We are also constructing two oil

tankers in our shipyard for our affiliates (under agreements that are pending execution) that we intend to charter-

in after delivery and acceptance of the completed vessels.

Time and Spot Charters

We charter out our vessels to third parties on two different types of contract arrangements: time charters

and spot charters.

Under time charter contracts, vessels are chartered to customers for fixed periods of time at a fixed charter

fee, which is calculated per day and generally denominated in U.S. dollars. The charter of a vessel under a time

charter includes the marine crew that operates the vessel, along with all maintenance services, supplies, spare parts,

crew meals and other operational services, all of which are factored into the charter fee. The chartering party

remains directly responsible for other voyage costs, which primarily comprise bunker fuel costs and port charges

and duties. Our time charters typically have an original lease term of between three months and ten years with one

or more extension periods exercisable at the option of the customer, depending on the particular demands of the

customer. In effect, under a time charter, a customer rents a fully operational vessel and crew for the time charter

term, during which time it can direct the route and cargo for the vessel, while the chartering party pays for the

bunker fuel costs and port charges incurred during the charter term. We invoice our time charter customers on a

monthly basis in arrears and payment is due within 30 days of receipt of our invoice. During time charter terms, we

are subject to various potential risks that may reduce our shipping revenues or increase our operating expenses,

such as termination of the contract if the vessel does not meet performance standards set out in the time charter

contract, such as DWT capacity and classification, or costs for providing a substitute vessel if our vessel is out of

service for dry docking or repair. Our time charter contacts are typically based on standard contracts provided by

our customers and require us to comply with certain performance standards, including environmental protection

and vessel safety standards.

Time charter contracts may be terminated by either party upon the occurrence of certain pre-agreed events

such as non-performance of the contract, prolonged maintenance required on the vessel (which would lead to

non-performance), hostilities (including the outbreak of war) or sale of the vessel. Our time charter contracts

require that we maintain certain insurance coverage with respect to our vessels, operate in accordance with

specified environment, health and safety policies, and indemnify the chartering party against damages caused by

environmental pollution or leakage from our vessels. Spot charters are arrangements where we charter our

vessel to a customer for a single voyage and are priced on a current or “spot” market rate. The customer pays a

flat spot fee for the charter, which includes the use of the vessel during the term of the spot charter. We calculate

the spot fee based on our estimated operational expenses, including bunker fuel costs, capital expenditures and

taxes. During the term of the spot charter, we bear the vessel operating expenses, which primarily comprise

bunker fuel costs and port charges and duties, in addition to our vessel maintenance costs. We factor such costs

and expenses into our spot fees.

We focus on chartering our vessels through a mix of time charter contracts and spot charters in order to

serve different sectors of the oil and gas and chemical production and supply chain. By engaging in time charter

contracts, which provide for a fixed charter fee throughout the term, we are better able to maximize our vessels’

utilization rates, manage our expenses and control the flow of our revenues, thereby protecting us against short-

term volatility in the market. We are also not exposed to fluctuation in bunker fuel costs, which are borne by the

customer in our time charters. However, we seek to maintain a balance between these contract arrangements and

opportunities in the spot market. In our experience, chartering parties engaged in chemical manufacturing and

the processing of finished products tend to favor spot charters while those engaged in upstream oil and gas tend

to favor time charters, because chemical manufacturers typically have smaller shipping volumes and are better

able to control the production quantity and transportation schedule from the processing location to the

purchaser. Additionally, we may charter our vessels in spot charters in between time charter terms to maximize

utilization of our vessels.

We obtain charter contracts from our customers through either a competitive tender/bidding process or a

direct offering and negotiation. If a customer determines a time charter is more suitable for its demands, the

customer will typically tender the time charter contract in a competitive bidding process, awarding the contract

to the service provider based on service quality, price, suitability of available vessels, as well as the technical

expertise and reputation of the provider. After being awarded the time charter contract, our vessel must undergo

inspection by the customer to ensure it is suitable for its needs. Spot charters are not tendered and are negotiated

based on the circumstances at the time the demand for a spot charter is determined. Demand for time and spot

charters varies based on oil and gas production and demand in Indonesia and abroad. When Pertamina tenders a

time charter contract, Pertamina will post on its website a tender announcement, setting out the criteria for the

charter, including type of ship, specifications, tender period and timeline for bidding process, and the bidding

process will be open to the public. There is typically a pre-bidding process, whereby qualified bidders meet with

Pertamina to further discuss the terms and conditions of the tender, after which the qualified bidders negotiate

terms and conditions with Pertamina. The daily charter rate for charter contracts is negotiated with Pertamina

but is ultimately determined based on Pertamina’s budget. Historically, our charter contracts with Pertamina

have been denominated in U.S. dollars, although under more recent contracts we receive payment from

Pertamina in the Rupiah-equivalent of the U.S. dollar rates. We believe that customers choose our services over

those of our competitors due to a combination of our long-standing reputation for safety and reliability, our

technical skill and the DWT capacity and diversity of our fleet. In addition, our service and flexibility has

enabled us to maintain long-term relationships with our customers, while at the same time building on our

reputation to win new shipping contracts. We have recently obtained long-term charter contracts with

international oil and gas companies, ConocoPhillips and Camar Resources.

We have experienced a stable rate of option extensions and renewals of our time charter contracts, as, in

our experience, our customers prefer to continue use of incumbent vessels rather than locate and contract a time

charter with a new vessel provided the provider meets the operating standards. The customer’s decision to renew

an existing time charter vessel is also based on the continuing suitability of our vessel for its particular needs.

We believe our long-standing relationship with our key customers has resulted in our fleet capabilities matching

the needs of our customers. In addition to continuing to service our existing customers, in the future, we believe

increased production in oil and gas blocks in Indonesia and the demand for oil and gas and chemical products in

Indonesia will drive continuing demand for both time and spot charter contracts.

We also regularly charter-in vessels from our affiliates to charter to our customers. In the year ended

December 31, 2014, 60.8% of our revenues from our shipping business were derived from time charter

contracts, and 39.2% of our revenues were derived from spot charter contracts.

Current Time Charter Bookings

The table below sets forth certain data in respect of our time charter contracts, as of April 30, 2015,

assuming all optional extension periods are exercised.

Expiring in the Years Ended December 31,

2015

2016

2017

2018 and after

Number of Vessels(1) ................................................................... 5 10 1 5 DWT Capacity(2) ......................................................................... 45,694 635,313 47,100 448,979 Contract Value (US$ in millions)(3) ............................................. 51.0 50.4 32.8 101.9

Notes: (1) Number of vessels refers to the number of vessels that were engaged in time charters as of April 30, 2015 that are scheduled to be released from

time charter contracts in the specified year(s). (2) DWT capacity refers to the aggregate DWT capacity of all of the vessels that are scheduled to be released from time charter contracts in the

specified year(s). (3) Contract revenue refers to the aggregate revenue of time charter contracts expiring in the specified year(s).

As of April 30, 2015, the weighted average remaining life of our time charter contracts was 5.6 years

weighted by contract value, including any optional extension terms.

Utilization Rates

The utilization rates for our fleet for the years ended December 31, 2012, 2013 and 2014 and the three

months ended March 31, 2015 were 95.9%, 98.1%%, 88.1% and 89.2%, respectively. Utilization rate for a

vessel is calculated by dividing the total number of days in a given period for which the vessel earns a daily

charter rate divided by the total number of days such a vessel is available. A vessel is considered available for

the days the vessel was in our fleet in a period. We do not consider a vessel to be in our fleet if it has either been

recently acquired and has not been fully incorporated into our commercial strategy or if the vessel has been

designated for sale. The fleet-wide utilization rate indicates the average rate for all of the vessels in our fleet

during a given period weighted by DWT capacity.

Customers

We have strong long-term relationships with many of our customers, which include the major

international oil and gas and chemical companies, engaged every aspect of the oil and gas production and supply

chain, including exploration and production companies operating in Indonesia, petrochemical manufacturers,

and importers of crude oil. Our customers include Pertamina, PLN, ConocoPhillips Camar Resources Canada

Inc., PLN, Wilmar Trading Pte. Ltd., PT Mitsubishi Chemical Indonesia, Indian Oil Corporation, Reliance

Industries Ltd., PT Mitsui Indonesia and PetroChina Jabung Ltd.. Many of our customers comprise companies

engaged in chemical manufacturing who tend to use single-voyage spot charter contracts since they can be

adjusted to the production quantity and transport schedule of the customers, as opposed to long-term fixed-time

charters typically used for the transport of crude oil and other raw materials. Chemical manufactures also tend to

have small capacity requirements then crude oil shipments. The following table shows our major customers by

percentage of net revenues for each of the last three years. None of these customers are related to our directors,

commissioners, executive officers or substantial shareholders.

Name of Customer

2012

2013

2014

PT Pertamina (Persero) .............................................................................................................. 68.2% 46.3% 52.4% ConocoPhillips (Grissik) Ltd. .................................................................................................... 3.4% 7.8% 6.0% Camar Resources Canada Inc..................................................................................................... 2.6% 4.6% 3.5% Perusahaan Listrik Negara ......................................................................................................... 7.2% 5.4% 3.3%

Historically, the largest and most important customer for our shipping business has been Pertamina, the

Indonesian state-owned oil company which operates extensive upstream and downstream oil and gas activities

throughout Indonesia. Pertamina is Indonesia’s largest state-owned enterprise in terms of revenue and income

and a major oil and gas producer in Indonesia, operating nine refineries in Indonesia. We enjoy a long-standing

business relationship with Pertamina, having provided marine shipping services to Pertamina for 35 years since

commencing our operations and believe we have developed an institutional relationship over the course of our

operating history. We are the largest provider of oil and gas and chemical shipping services to Pertamina and

one of the longest-serving shipping providers used by Pertamina Currently, a majority of our long-term charter

contracts are with Pertamina, and Pertamina hires a variety of types of vessels from our diversified fleet.

Pertamina accounted for approximately 52.4% of our revenues in the year ended December 31, 2014. As of

April 30, 2015, 45.4% of our fleet by DWT was engaged in time charter contracts with Pertamina. We believe

our long-standing business relationship with Pertamina in our shipping business has also contributed to

qualification to bid for shipbuilding contracts with Pertamina.

Our Fleet

Oil Tankers

As of March 31, 2015, we operated 18 oil tankers, two of which were the only Indonesian-flagged VLCCs

operating in the market, with total capacity of 1.1 million DWT. Our oil tanker fleet is comprised of crude

tankers and product tankers. The primary function of our oil tankers is to transport unprocessed crude oil from

processing facilities to refineries and to transport processed oil from refineries to the market. As of March 31,

2015, our oil tanker fleet had an average vessel age of approximately 22.6 years.

We currently operate 14 of our oil tankers under time charter contracts and charter out four of our oil

tankers on a spot basis. Of our oil tankers, 14 are on long-term and short-term time charters with Pertamina (for

domestic crude oil transportation) with maturities between the second quarter of 2015 and the first quarter of

2020.

Chemical Tankers

As of March 31, 2015, we operated 12 chemical tankers, with total capacity of 59,253 DWT. As of

March 31, 2015, our chemical tanker fleet’s average vessel age was approximately 25.2 years.

Chemical tankers transport liquid chemicals from processing facilities to markets, including sulphur,

phosphor, crude palm oil and others. Chemical tankers may be constructed with separate tanks within one

vessel, allowing a chemical tanker to transport a number of different types and/or grades of chemical products at

any one time.

We operate substantially all of our chemical tankers under spot contracts, as the customers for our

chemical tankers typically tend to ship smaller quantities than our oil tanker customers.

Gas Tankers

As of March 31, 2015, we operated three gas tankers, which are LPG gas tankers, with total capacity of

11,714 DWT. As of March 31, 2015, our gas tankers had an average age of 19.7 years. Our gas tankers are used

to transport LPG and chemical gas.

Our gas tankers primarily operated under time charter contracts.

FSO Tankers

An FSO tanker is a floating storage and offloading tanker. Our FSO tankers are oil tankers which we have

converted to meet the requirements of customers’ production terminal. As of March 31, 2015, we had two FSO

tankers in our fleet. These tankers have a total capacity of 143,283 DWT. As of March 31, 2015, our FSO

tankers had an average age of 21.0 years. We typically operate the FSO tankers under time charter contracts.

Our FSO tankers currently operate under time charter contracts.

Vessels Chartered-in

We charter-in vessels under time and spot arrangements (i) to evaluate a vessel on a temporary basis in

order to consider a potential acquisition, (ii) when a customer requires a vessel that we do not have in our fleet

and/or (iii) to provide substitute vessels while our vessels undergo dry docking. With respect to such charter

arrangements, we generally favor spot charters for substitutes and time charters to test vessels and to meet the

demands of our customers. We also regularly charter-in two General Purpose vessels from our affiliates under

time charters to be used in our shipping business. As of March 31, 2015, we had chartered-in two vessels from

our affiliates under time charters and no vessels chartered-in from third parties.

Vessel Acquisitions

We regularly assess the market for vessels in order to be able to take advantage of acquisition

opportunities based on our customers’ demands. Our primary method of vessel acquisitions has been pre-owned

vessels, and we expect to continue to focus on acquisition of pre-owned vessels in the future. We focus on

growing the overall capacity of our fleet, while diversifying our types of vessels so that we are able to serve our

customers’ requirements across various segments of the oil and gas and chemical production and supply chain.

We are currently in negotiations with third party sellers to acquire one or more additional pre-owned vessels in

the near future.

The table below sets forth a summary of our vessel acquisitions and disposals in the period indicated:

Years Ended December 31,

Three Months

ended

March 31,(1)

2012

2013

2014

2015

Acquired

Number of vessels ............................................................................................... 3 3 2 2 Capacity (DWT) ................................................................................................. 119,235 441,195 209,324 7,784

Disposed

Number of vessels ............................................................................................... 3 0 2 0 Capacity (DWT) ................................................................................................. 10,435 — 127,088 —

Note: (1) We added two vessels to our fleet after March 31, 2015, namely, KM Fortune Pacific XLIX and KM Success Dalia XLVIII.

Due to the cyclicality of the markets in which we operate, we are cautious when analyzing the market as

well as the value, condition and earnings potential of vessels we consider for acquisition. We also monitor the

availability of vessels in the market in which we operate by maintaining contact with ship dealers to ensure that

we have an extensive knowledge base, and we liaise with Pertamina and other customers about their demand so

that we can react promptly to changing market conditions and opportunities as they arise. We believe we enjoy a

competitive advantage due to our access to the market of pre-owned vessels, our understanding of our

customers’ needs and the technical expertise of the marine crew that operates our vessels, which allows us to

operate older vessels, thus reducing our vessel acquisition cost.

Vessel Financing

We frequently bridge the cost of acquisition of vessels with cash on hand or with shareholder loans and

refinance with debt capital post-acquisition. Most of our ship-financing loans are U.S. dollar-denominated loans.

Loans for our pre-owned acquisitions are specifically tailored for each pre-owned vessel we acquire.

Historically, these purchase loans have been secured by way of, among other things, a mortgage over the

relevant vessel, in addition to a charge over the earnings, accounts and insurances in relation to the relevant

vessel, in favor of the lenders. In certain cases, our purchase loans have been cross-collateralized where lenders

have provided us financing for the purchase of other vessels.

We have used in the past, and may continue to use in the future, shareholder loans from PT Soechi Group,

our group’s parent company, to provide short-term financing for the acquisition of vessels to expand our fleet.

We have may difficulty obtaining funding to acquire vessels if our shareholders do not provide us with

financing in the future.

Vessel Disposal

We dispose of vessels from our fleet in response to market conditions and the utility in our operations of

the vessels in question. We typically dispose of a vessel if, during dry docking, we determine that the cost of

maintenance is likely to exceed the future chartering capability of such vessel. We generally sell oil and

chemical tankers once they have reached their useful life of 30 years. We may sell younger vessels that still

have a number of years in their useful life if we receive an offer that is financially attractive for us and if our

capacities and strategic plans make it possible for us to part with that vessel. In 2012, 2013 and 2014, we sold

three, zero and two vessels, respectively.

Vessel Management

We undertake the commercial and operational management of our charters and fleet, including

commercial strategy, commercial and financial management, vessel acquisition and disposal, chartering and the

development of new business opportunities. We have entered into contracts with our affiliates, PT Equator

Maritime and PT Vektor Maritim, to provide technical management services for our fleet. Our technical

managers provide technical management services in respect of our vessels, which in practice include managing

compliance with regulatory and classification standards in respect of our vessels. Our technical managers also

manage the Health, Safety and Environment reporting for our fleet and liaise directly with the classification

societies and with the Government regulators on our behalf regarding the compliance of our vessels with

international safety standards and applicable regulations.

In addition, our technical managers control the selection and employment of marine crew that operate our

vessels. Selected seafarers enter into employment contracts with our technical managers. In return for their

services, we pay management fees, which were equal to US$0.03 million, US$0.7 million, US$0.5 million and

US$0.0 million in the years ended December 31, 2012, 2013 and 2014 and the three months ended March 31,

2015, respectively. In addition, our technical managers cover marine crew expenses, classification and other

expenses, which we reimburse.

Our technical managers recruit new marine crew through local maritime training institutions in Indonesia,

including Politeknik Ilmu Pelayaran Makassar, Sekolah Tinggi Ilmu Pelayaran Jakarta and Akademi Maritime

Indonesia. Through their cadet training program, our technical managers employ students from maritime

academies for short term contracts, providing training and experience, with a view to hire them on a full-

contract basis following completion of their maritime training.

We believe the streamlining of crewing arrangements through our technical managers ensures that all of

our vessels will be staffed with experienced marine crew that have the qualifications and licenses required by

applicable regulations and shipping conventions. Our technical management consultants have not experienced

any material work stoppages due to labor disagreements. Although our technical managers have historically

experienced a high retention rate for the marine crew, the demand for technically skilled officers and crew to

serve on vessels has been increasing. In recent years, the increased demand for well-qualified crew has created

upward pressure on crewing costs, which we generally bear under our time charters, although this pressure is

balanced by the large pool of marine crew operating our vessels which are managed by our technical managers.

In the past we have engaged foreign third party consultants to provide technical management services for

our vessels. Currently, all of our technical management services for our vessels are performed by our affiliates,

PT Vektor Maritim and PT Equator Maritime.

Shipyard

In 2012, we commenced operations of our shipyard located in the Free Trade Zone in Karimun, Riau

Islands, Indonesia, located approximately 80 kilometers southwest of Singapore. The first phase of our shipyard

has a total land area we estimate is approximately 50 hectares, with an additional area of approximately 168

hectares available for expansion. We hold the land comprising our current shipyard and the land available for

expansion under various land interests. Our shipyard is located in the Malacca Strait, one of the busiest

international shipping routes in Southeast Asia and in the world. We believe the location of the shipyard in the

Free Trade Zone provides our shipyard with advantages on the import of materials and spare parts, including

tax-free status and expedited customs clearance, allowing us to provide competitive prices for shipbuilding and

ship repair services. Our shipyard, with a coastal depth of 12.0 meters and 1.3 kilometers of coast line, is easily

accessible to, and able to provide shipbuilding and docking services for, vessels of various capacities. Our

shipyard operations are conducted through our operating subsidiary, PT Multi Ocean Shipyard.

The chart below shows the location of our shipyard in Karimun, Indonesia in relation to Singapore and

Batam, Indonesia:

Our shipyard is equipped for, and has commenced, shipbuilding activities as of 2012. Following the

completion of our 50,000 DWT floating dry dock, which we expect to commence operations in the fourth

quarter of 2015, our shipyard will be capable of receiving orders for maintenance and repair and oil and gas

fabrication.

Our revenues from our shipyard business were US$436,876, US$3,906,506, US$17,157,381 and

US$6,317,425, respectively, for the years ended December 31, 2012, 2013 and 2014 and the three months ended

March 31, 2015, all of which is attributable to shipbuilding activities. Our revenues from our shipyard business

increased 796.2% from 2012 to 2013, 414.3% from 2013 to 2014 and 172.1% from the three months ended

March 31, 2014 to the three months ended March 31, 2015. We recognize revenue from our shipbuilding

activities based on a percentage of completion of the project.

The table below sets forth our net revenues from our shipyard business as a percentage of our net revenues

for the years ended December 31, 2012, 2013 and 2014 and the three months ended March 31, 2014 and 2015:

For Years ended December 31,

For Three Months ended

March 31,

2012

2013

2014

2014

2015

(US$) Shipyard

Third party .......................................................................... 435,876 3,906,506 17,157,381 2,321,333 4,352,245 Related................................................................................ — — 2,931,980 — 1,965,180

Total ....................................................................................... 436,876 3,906,506 20,089,361 2,321,333 6,317,425

Shipbuilding

We commenced providing shipbuilding services in 2012 and offer complete design and construction

services for vessels of various specifications and functions, including oil tankers, floating storage offloading

vessels and other marine vessels. Our shipyard has a total of seven assembly areas with the ability to construct

vessels of up to 20,000 DWT each in capacity.

As of March 31, 2015, we had five vessels under construction, including three oil tankers being

constructed for Pertamina each of 17,500 DWT, and two oil tankers of 4,000 DWT and 3,500 DWT capacity,

respectively, which we are constructing for our affiliates. After delivery and acceptance of the oil tankers by our

affiliates, we intend to charter-in the vessels for use in our shipping business. We are constructing vessels for

our affiliates and plan to charter them so that we do not incur substantial capital expenditures for the

construction of new vessels.

Our vessels under construction are at various stages of completion, and we intend to deliver our first

completed vessel, a 17,500 DWT oil tanker, to Pertamina in the fourth quarter of 2015. We recognize revenue

from our shipbuilding activities based on a percentage of completion of the project.

The table below sets forth the vessels under construction and the percentage completion as of March 31,

2015:

Customer

Vessel

Approximate Contract

Price

Approximate

Percentage Completion

as of March 31, 2015

Scheduled Delivery

Date

Pertamina ..................................................... 17,500 DWT crude oil

tanker US$20-25 million 66.4% Fourth quarter 2015

Pertamina ..................................................... 17,500 DWT jet fuel

tanker US$20-25 million 26.3% Second quarter 2016

Pertamina ..................................................... 17,500 DWT product

oil tanker US$20-25 million 14.3% Second quarter 2016

PT Sejahtera Bahari Abadi (our

affiliate) ................................................... 4,000 DWT SPOB US$10 million 29.6% Fourth quarter 2015 PT Lautan Pasifik Sejahtera (our

affiliate) ................................................... 3,500 DWT oil tanker US$12 million 16.2% Second quarter 2016

We employ a shipbuilding crew that comprises approximately 12 permanent employees and 1,546 sub-

contracted employees as of March 31, 2015 and has the capability of building new vessels of up to 20,000 DWT

of capacity. Our permanent employees are responsible for management, supervision and health and safety

procedures at the shipyard. Our sub-contracted employees are hired from one company and we typically pay

such sub-contracting company on a lump-sum basis. The work on vessels at our shipyard is typically performed

by subcontracting companies that are based in our shipyard on a long-term basis and are supervised by our

permanent employees. We also engage experienced shipbuilding consultants to provide technical expertise on

all phases of the shipbuilding process.

We outsource the ship design to an external engineering company specializing in the shipbuilding

industry, and we agree on design specifications with our customer before commencing the build. Before

delivery, our vessels are classified by an agreed upon classification society, such as DNV GL or NKK.

In 2005, the Government implemented shipping regulations requiring Indonesian-flagged vessels that are

funded by state budget to be built by a domestic shipyard, where practicable. To date, our only third party

customer for shipbuilding services has been Pertamina. Our shipbuilding contracts from Pertamina have been

awarded to us through a tender process, whereby we participate in a competitive bidding process. Between

June 2013 and May 2014, we executed three shipbuilding contracts with Pertamina for the construction of three

17,500 DWT oil tankers, for the transportation of various types of oil and gas cargo. The aggregate amount of

the three shipbuilding contracts with Pertamina is approximately US$69.0 million. We believe the Government

regulation will prompt increasing demand for shipbuilding services in Indonesia, particularly by oil and gas

contractors, which previously executed shipping contracts from overseas shipyards.

Our shipbuilding contracts with Pertamina contemplate delivery of the completed vessel within 24 months

of contracting, which is typically the amount of time required to construct an oil tanker of the size and

specification required by Pertamina. The agreements require Pertamina to make progress payment to us in five

installments, each equal to 20% of the contract price, at different phases of the construction process, the first of

which is paid on contracting and the last of which is paid upon final delivery of the vessel. These progress

payments are refundable to Pertamina in the event there is a total loss or the shipbuilding contract is rescinded

due to our breach. We have obtained a refund guarantee from Bank Mandiri in favor of Pertamina to secure our

contingent liability to provide a refund. We may be liable for liquidated damages due to delayed delivery of the

vessel or for any material failure to meet the specifications of the shipbuilding contract. We are required to

provide a manufacturer’s warranty against physical damage of the vessel due to defect or poor workmanship for

a period of 12 months from the delivery and acceptance of the vessel by our customer, and the warranty must be

secured by a bond in the amount of 3.0% of the contract price.

Ship Repair and Maintenance

Our ship repair and maintenance services, once operational, will include ordinary sea-damage dock

repairs, overhaul of old ships, ordinary maintenance and dry docking services and repair and maintenance of

onboard equipment, each for all types of vessels, including oil and gas tankers, containers, bulk carriers and

offshore supply vessels. Our shipyard will be equipped with advanced equipment for dock repairing as well as

testing and measuring facilities, including steel cutting and fabrication workshops enabling us to conduct a wide

range of repair and maintenance work. We intend to commence operation of our ship repair and maintenance

services after the completion of our floating dry dock, which will have a capacity of 50,000 DWT and is

estimated to commence operations in the fourth quarter of 2015.

Our shipyard, when operational, will have a capacity of repairing up to 40 ships per year, each vessel with

a maximum capacity of 50,000 DWT. We expect to be capable of servicing five vessels at various stages of

maintenance and repair at any one time. Our dry dock is capable of accommodating one vessel of up to 50,000

DWT capacity. International classification societies require that vessels conduct an internal inspection every

five years and an intermediate inspection approximately every 2.5 years. We believe our shipyard facility will

provide a domestic alternative for large vessels operating in Indonesia, rather than docking in overseas shipyards

such as PRC and Singapore, which typically involve expenses for time and fuel. We also believe the location of

our shipyard, in the active Malacca Strait in close proximity to Singapore, will provide a convenient location for

vessels operating in Southeast Asia. With our strong ship repair and maintenance capability, we are able to

provide a cost-effective solution for quality and timely ship repairing service. We expect to expand our existing

shipyard crew to provide ship repair and maintenance services by increasing our permanent and temporary

employees.

We also intend to leverage our repair and maintenance capabilities to dry dock the vessels used in our

shipping business, thereby reducing our docking expenses. Currently, each of our vessels are docked and

undergo inspections approximately every 2.5 years. Our amortized docking expenses were US$3.5 million,

US$3.8 million, US$4.6 million and US$1.2 million, respectively in the years ended December 31, 2012, 2013

and 2014 and in the three months ended March 31, 2015. Our in-house repair and maintenance function will

allow us to reduce docking expenses otherwise paid to third parties.

Oil and Gas Fabrication

Our oil and gas fabrication services will comprise a spectrum of fabrication services for the upstream oil

and gas industry, including fabrication, assembly, erection, inspection, testing, load out and planning services

for the completion fabrication works. Our shipyard will be equipped with five workshops for fabrication, piping

and outfitting. Our shipyard will also feature modern facilities that will support our oil and gas fabrication

services, including workshop machinery, piping and outfitting workshop, paint and blasting shop and block

assembly yard. We plan to commence oil and gas fabrication services in the second half of 2015 following

completion of our floating dry dock.

Competition

In domestic trade involving shipping within Indonesia, unlike the international arena, there are a limited

number of competitors in the field. As a result of the implementation of the cabotage principle into Indonesian

shipping laws, which were part of the Government’s efforts to support domestic shipping companies, and the

limitation on foreign investment in Indonesian shipping companies, competition from foreign shipping

companies is minimal, and we benefit from our position as one of the few domestically-owned shipping

providers in Indonesia capable of servicing the oil and gas industry with a fleet nearly entirely comprised of

Indonesian-flagged vessels.

For charter of Indonesian-flagged vessels in Indonesian waters, we face competition from other

Indonesian shipping companies, although we believe there are no significant competitors that match the size and

diversification of our fleet. We face diversified competition from multinational shipping companies for our

international shipping activities. Competition for shipping services is based on factors including availability and

suitability of vessels to meet customers’ demands, expertise in vessel operation, quality and experience of

marine crews, performance and safety record, reputation and price. We believe our fleet is more extensive and

diverse than our competitors’, which has allowed us to serve our customers’ needs and maintain a stable

utilization rate of our vessels and a high rate of renewal of our time charters. In addition, we believe our

experience providing shipping services for over 35 years gives us the requisite expertise to provide quality

service to our customers. Our directors believe our existing time charters will continue their track record of

renewal, as our vessels have proven well-suited for the needs of the charterers, and we have established a track

record of meeting our customers’ operating standards. In the import market, we believe we benefit from a

competitive advantage due to the high withholding tax of 20% to which foreign entities are subject, while we, as

an Indonesian entity, are subject to a 1.2% withholding tax. Our main competitors in our shipyard business are

international shipyards in Singapore, China and South Korea, which have longer operating histories and greater

capacity to provide shipping and repair services. Because of the location of our shipyard in the Free Trade Zone

and being the largest shipyard Indonesia, in terms of area, and within the active Malacca Strait shipping channel

we believe we will be able to provide a nearby and cost-effective alternative to dry docking in other shipyards in

Asia.

Suppliers

Our main suppliers are industry distributors of bunker fuel. Prices for bunker fuel are generally driven by

the world market. We also have multiple suppliers for raw materials and original parts for our shipbuilding

services. No supplier provides us with more than ten percent of our total purchases for products or services and

our business and profitability are not materially dependent on any contract with any of our suppliers. We also

use various suppliers to provide docking, equipment and insurance services. We also purchase lube oil from one

of our affiliates, PT Rezeki Putra Energi, from time to time.

Safety, Quality and Maintenance

Safety, the preservation of life and the protection of the environment are our core values. In keeping with

these values, our fleet has maintained a strong safety record. Every commercial seagoing vessel must be

“classed” by a classification society. Our fleet is currently classed by LR, ABS, DNV GL, NKK and BKI or

others. The IMO adopted an International Safety Management Code (the “ISM Code”) in 1993, which became

mandatory in 1998. The code establishes safety management objectives and requires a Safety Management

System (“SMS”) to be established by the shipowners or any persons, such as the managers or bareboat

charterers, who have assumed responsibility for operating a ship.

A classification society certifies that a vessel is “in class,” signifying that the vessel has been built and

maintained in accordance with the rules of the classification society and complies with applicable rules and

regulations of the vessel’s country of registry and the international conventions of which that country is a

member. In addition, where surveys are required by international conventions and corresponding laws and

ordinances of a flag state, the classification society will undertake them on application or by official order,

acting on behalf of the authorities concerned. A vessel must undergo scheduled annual surveys, intermediate

surveys, dry docking and special surveys.

A classification society may also undertake on request other surveys and checks that are required by

regulations and requirements of the flag state. These surveys are subject to agreements made in each individual

case and/or to the regulations of the country concerned.

For maintenance of the class, regular and extraordinary surveys of hull, machinery, including the electrical

plant, and any special equipment classed are required to be performed as follows:

Annual Surveys: For seagoing vessels, annual surveys are conducted for the hull and the machinery,

including the electrical plant, safety and communication equipment and, where applicable, for special equipment

classed. These surveys occur at intervals of 12 months, plus or minus three months, from the date of

commencement of the class period indicated on the certificate.

Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and are typically

conducted in conjunction with the second or third annual survey after each special survey.

Dry docking Surveys: We dry-dock our vessels twice within the five-year survey cycle, with a

maximum of 36 months between inspections, for survey of the underwater parts and for repairs related to

inspections. An in-water survey may be permitted in lieu of a dry docking for the intermediate survey for vessels

below 15 years old, although the vessel must carry out a dry docking in conjunction with a special survey.

Special Surveys: Special surveys, also known as class renewal surveys, are carried out for the vessel’s

hull, machinery, including the electrical plant, safety and communication equipment and for any special

equipment classed, at five-year intervals from the vessel’s certification. At the special survey, the vessel is

thoroughly examined, including ultrasonic measurements to determine the thickness of the steel structures.

Should the thickness be found to be less than the class requirements, the classification society would prescribe

steel renewals (replacement of steel). The classification society may grant a one-year grace period for

completion of the special survey. Substantial amounts of funds may have to be spent for steel renewals to pass a

special survey if the vessel experiences excessive wear and tear. At an owner’s application, the surveys required

for class renewal may be split according to an agreed schedule to extend over the entire period of class. This

process is referred to as continuous class renewal.

If defects are found by the classification surveyor during any survey, an immediate repair may be

required. However, if the class surveyor considers it safe for the vessel to continue service without an immediate

repair, the surveyor will issue a condition of class which will require the defect to be rectified within prescribed

time limits. Any conditions of class must be repaired at the time of the special survey or earlier if prescribed by

the classification society.

As of March 31, 2015, six of the vessels in our fleet were scheduled for special survey and nine were

scheduled for dry docking for the remainder of 2015. In 2015, 15 of our vessels are scheduled to pass dry

dockings and special surveys.

All areas subject to survey as defined by the classification society are required to be surveyed at least once

per class period, unless shorter intervals between surveys are prescribed elsewhere. The period between two

subsequent surveys of each area must not exceed five years.

Insurance underwriters generally make it a condition for insurance coverage that a vessel be certified as

“in class” by a classification society that is a member of the International Association of Classification Societies.

We use third party contractors to provide regular dry dock maintenance and seek to keep our vessels in

excellent working condition in order to satisfy the international operating standards required by the international

oil companies and other significant customers, as well as to prolong the useful life of our vessels. Our vessels

are dry docked in shipyards that are convenient to the area in which a vessel operates. The majority of the

shipyards used are located in Singapore or China, with other established shipyards in Batam, Indonesia. Other

repair and maintenance services are planned and carried out in convenient ports with established repairers and/or

an appointed agent for equipment makers. Established shipyards we use are Cosco Guangzhou Shipyard, Cosco

Shanghai Shipyard and Yiu Lian Dockyard in the PRC and ASL (Batam) Shipyard in Indonesia.

After commencing our ship repair and maintenance operations, we intend to dry dock and undertake

regular repair maintenance in respect of our vessels, where possible, at our shipyard. Marine crew members are

responsible for carrying out routine maintenance onboard the vessels and, where necessary, additional crew

members are added to perform specific maintenance and upgrading tasks during voyages. We believe that our

schedule of dry docking and our continuous efforts to repair and maintain our vessels help us maintain the

efficiency and safety of our fleet operation.

In the past five years, none of our vessels has been involved in any material accident or incident, and no

members of the marine crew that operates our vessels has suffered any life-threatening work-related injuries or

death.

We install vessel tracking equipment in each of our vessels, which allows us to track the location of our

vessels at all times, anywhere in the world. We maintain a staff of eight employees designated to monitoring the

location and status of our vessels on a 24 hour a day, 7 days per week basis. We maintain safety, security and

response protocols in the event of a disaster, such as serious damage to one of our vessels, whereby relevant

members of senior management will be alerted of the incident on an immediate basis. We have had no material

safety-related incidents in the last five years.

Environment and Pollution

All of our vessels are operated in compliance with relevant national and international pollution prevention

protocols. We comply with all mandatory environmental measures and requirements for each vessel carrying

liquid cargo, such as crude oil and certain chemical products, as prescribed by the various regulatory authorities

that regulate the shipping industry. All of our vessels have a pollution prevention manual on board.

Material Licenses

The material licenses we have obtained in connection with our business operations include, among others,

a sea transport company business license, Vessel Certificates, a transportation business license, an industrial

business license and a ship building and ship repairing business license.

In addition, based on the Shipping Law, each of our vessels is also required to have various vessel

certificates, inclding the certificate of vessel safety and certificate of load line (“Vessel Certificates”). The terms

of each of these Vessel Certificates vary from 3 months to 5 years, and each type of vessel may require different

Vessel Certificates. The Vessel Certificates are required for a vessel to obtain port clearance from the relevant

port authority in Indonesia each time a vessel leaves a port. As a practical matter, in the shipping business, some

vessels may have one or more expired Vessel Certificates from time to time, including for instance, when Vessel

Certificates expire while at sea and may only be extended the next time the vessel docks. In addition, Vessel

Certificates may expire while our vessels are docked, and we may only apply for their extension immediately

prior to sailing.

With regard to the transportation business license, based on GR 36/2004, a company is only required to

obtain a transportation business license in the event that it transports oil and/or gas on a spot charter

arrangement or in the event that it transports oil and/or gas for a company without a processing business license

(izin usaha pengolahan) or storage business license (izin usaha penyimpanan) or commercial business license

(izin usaha niaga). We transport oil from Pertamina under time charters with the latter operating our vessel, and

we understand from the DGOG that Pertamina is currently in possesion of a commercial business license. Thus,

based on GR 36/2004, we are not required to obtain a transportation business license for our vessels or time

charter with Pertamina.

Vessel Flag State

The flag state of a vessel, as defined by the United Nations Convention on the Law of the Sea, has overall

responsibility for the implementation and enforcement of international maritime regulations for all ships granted

the right to fly its flag. Our vessels are flagged in Indonesia and Panama.

Each flag state applies its own regulatory requirements based on the guidelines developed by International

Maritime Organization and specific classification requirements for vessels. These include minimum safety

construction and equipment standards and are subject to periodic survey and inspection requirements, pursuant

to adoption and implementation of international conventions. Although the conventions only apply to vessels

over a specified tonnage, individual flag states may also apply additional requirements over and above the

specified conventions. Individual flag states in which a vessel operates may also apply laws as to local licensing

(including rights of detention), sabotage, pollution and environmental requirements and other matters.

Insurance

The insurance requirements for operating a vessel are different in nature from those which apply to other

industries, as vessels operate all over the world, calling at various ports in various countries at different times.

The complex circumstances involved in sea and inland voyages require specific arrangements for the provision

of marine insurance. Generally, a marine policy may cover the risks of a single voyage or may insure for a

certain period of time. Cargo is almost always insured by voyage by the chartering party. Vessels are usually

insured for a certain duration of time, usually year by year. Cargo policies may be based on a single load or may

cover all cargo shipped by the insured. Hull insurance or vessel insurance may cover a ship or a whole fleet.

Hull and Machinery. Our Group’s hull and machinery policies cover physical damage to the vessel, its

machinery and equipment. In addition, the policy covers general salvage, litigation and labor liability. Coverage

for our vessels under the hull and machinery policy is written with a vessel value, as agreed upon between us

and the underwriters of the policy. Our hull and machinery policy provides a total cover of up to US$27.2

million across our entire fleet. The hull and machinery insurance underwriters of our fleet are PT Tugu Pratama

Indonesia, PT Arthagraha General Insurance, PT Fairfax Insurance Indonesia, Charles Taylor Mutual

Management (Asia) Pte. Ltd., Shipowners’ Asia Pte. Ltd. and PT Great Eastern Life.

Protection and Indemnity Our protection and indemnity policy covers personal injury and illness, cargo

claims, collision, third parties’ liabilities and oil pollution. Our protection and indemnity policy has a total cover

of up to US$5.0 million per occurrence across our entire fleet. Shipowners’ Mutual Protection and Indemnity

Association underwrites the protection and indemnity policies for our vessels.

We have not experienced any difficulties obtaining or renewing our insurance policies, or in realizing

claims under any of our insurance policies. We believe that this level of insurance cover is in line with standard

market practice for the industry.

Employees

As of March 31, 2015, we had a total of 194 and 1,897 permanent and temporary employees, respectively.

The following table shows the number of our employees as of December 31, 2012, 2013, 2014 by activity:

As of December 31,

2012

2013

2014

Employees by Activity:

Shipbuilding ....................................................................................................................... 166 185 1,558 IT 9 13 19 Finance/Accounting ............................................................................................................ 34 52 67 Human Resource ................................................................................................................ 38 54 47 Legal .................................................................................................................................. 4 3 3 Operational Staff ................................................................................................................ 100 157 175

Total .................................................................................................................................. 351 464 1,869

As of December 31,

2012

2013

2014

The following table sets forth the number of contracted employees in the marine crew that operates our

vessels as of December 31, 2012, 2013 and 2014:

As of December 31,

2012

2013

2014

Marine Crew

Contracted Employees .......................................................................................................... 649 713 740

We do not directly employ marine crew to operate our vessels. Our marine crew is employed under

contracts with our technical managers, PT Vektor Maritim and PT Equator Maritime, and we reimburse them

for the cost of appointing such crew on a cost-pass through basis. We and our technical manager provide in-

house training for experienced crew members, through periodic training sessions and development programs on

international standards for the safety and operation of our vessels.

Pursuant to cabotage principles under Indonesian shipping laws, Indonesian-flagged vessels must be

manned by Indonesian crew. Most of the marine crew that operates our vessels are Indonesian, although our

technical managers occasionally appoint crew members from outside Indonesia when necessary and where crew

matching our needs is not available domestically.

We have not experienced any strikes or disruptions due to labor disputes. We consider our relations with

our employees to be good.

Properties

As of March 31, 2015, our properties comprised office and warehouse space located in Indonesia used in

connection with our shipping and shipyard businesses and for general administrative functions, including our

head offices and the warehouse and workshop facilities at our shipyard.

The total land area of our shipyard, including the first phase of our shipyard and the land available for

expansion is approximately 218 hectares, comprising (i) approximately 45 hectares registered in the name of our

subsidiary, MOS; (ii) approximately 100 hectares for which the Government has granted us a reclamation

license (the land reclamation is still under progress) for which we will only be able to apply for the land title

certificate after the land reclamation is completed; (iii) approximately 40 hectares of land that we lease from the

regional government for an 80-year period and are in the process of applying for a land title certificate (in the

form of HGB); and (iv) approximately 33 hectares that we together with Hartono Utomo, one of our Directors,

acquired from local residents that are pending registration with the relevant local authorities.

We are subject to the risk that we do not obtain a certificate of title for our entire shipyard.

Material Litigation

We are not involved and have not, in the last 12 months, been involved in any legal or arbitral

proceedings, and no proceedings are threatened, which may have or have had a material and adverse effect on

the business, properties, financial condition, operations or prospects of our Group.

Awards

We qualify for the standard Stage 2 Tanker Management Self Assessment by the Oil Companies

International Marine Forum. We also obtained ISO 9001:2008 for quality control management for shipping

companies.

Intellectual Property

We do not have any patents, licenses or trademarks on which our business is materially dependent.